The bond selloff extended meaningfully on Thursday, as supply concerns, the Fitch downgrade and, at the margins I guess, Bill Ackman’s long short tweet (there’s a great joke or two buried in there if you look hard enough), weighed on the market.

I’m skeptical that we know anything now we didn’t know coming into this week. There were a few ostensible surprises in the refunding announcement but nothing earth-shattering, and while the Fitch decision surprised some market participants, the rationale was just a recap of familiar debt and deficit statistics with a nod to the deleterious effect of partisan gridlock on governance. Again, nothing new.

Meanwhile, nobody should be surprised at sturdy labor market data out of the US (like the ADP report and another benign read on jobless claims). If anything, the ULC print was bond bullish, and the ISM updates pointed to less hiring and slower activity.

As for Ackman, who cares? When was the last time you personally made any real money trying to replicate a trade some brand name “legend” talked up on social media (or CNBC)? Ackman’s tweet (or his “X” or whatever it’s called now when you waste time you can’t get back rambling to strangers in the digital void), was 2,000 characters, just “slightly” more than the original, old school Twitter limit of 140. Ackman loves his long tweets/Xs.

To be sure, most of what he said was right, particularly this bit:

I have been surprised how low US long-term rates have remained in light of structural changes that are likely to lead to higher levels of long-term inflation including de-globalization, higher defense costs, the energy transition, growing entitlements and the greater bargaining power of workers. As a result, I would be very surprised if we don’t find ourselves in a world with persistent ~3% inflation.

That’s spot on, but it’s just a summary of the “regime shift” thesis everyone’s been debating for the better part of two and a half years. That debate kicked into high gear following Russia’s invasion of Ukraine, and it’s a mainstay of the daily and weekly macro discourse. It’s certainly a mainstay in these pages.

Ackman all but screamed fire in a crowded theater with the trade already on, as hedge fund managers are wont to do. “There are many times in history where the bond market reprices the long-end of the curve in a matter of weeks, and this seems like one of those times,” he said. “That’s why we are short in size the 30-year.”

Wouldn’t you know it, 30-year yields rose 15bps the following session. The official explanation (i.e., what you’ll hear from analysts and strategists) is that the long-end-led selloff is a function of supply dynamics. That’s not wrong, but… well, Ackman told the world he was short, the financial media dutifully made a story out of it and then the market moved in his favor the very next day. I’ll just leave it at that.

Note that 30-year reals at nearly 2% are the highest in a dozen years.

As BMO’s Ben Jeffery and Ian Lyngen remarked, in a characteristically incisive take, “the fact that reals have led the move gives weight to the term premium argument as the driving force behind the latest move toward higher rates.”

That’s helpful for the Fed in one respect. Financial conditions are tightening on their own, but somebody forget to tell stocks. “The 800-pound risk asset gorilla in the room is the ongoing resilience of the equity market which is keeping overall conditions easier than would otherwise be the case,” Jeffery and Lyngen went on. “As we ponder the sustainability of real rates this high, we cannot help but feel that we’ll see either lower reals or lower equity prices — even as Keynes’s wisdom concerning rationality and solvency dance in our heads.”

Kudos as usual to Jeffery and Lyngen. It gets no better than that when it comes to near real-time market color.