On 27 February the 10-year Treasury note yielded below 4% and the market was pricing three rate cuts. Seven months later the yield is 5% and the market is pricing three increases.
The consensus reading of that move is fiscal: too much issuance, an inflation risk premium, a bond market losing patience. Steven Major says the arithmetic does not need any of it.
"The term premium hasn't gone up. People have been claiming that it has. It has not gone up."
Major spent 24 years running fixed income research at HSBC before joining the interdealer broker Tradition, and he has spent most of that career arguing the low-rate case against the market.
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Here are the 6 arguments that matter.
👤 Guest: Steven Major, Global Macro Advisor at Tradition, previously Global Head of Fixed Income Research at HSBC
🎙️ Hosts: Tom Keene and Paul Sweeney, who anchor Bloomberg Surveillance
🧩 Other segments: Alicia Levine, CIO of BNY Wealth; Jay Goldberg of Seaport Research Partners; and David Rosenberg of Rosenberg Research
📰 Published: 16 September 2026 on the Bloomberg Surveillance feed
🟣 Apple Podcasts | 🔗 Episode page | ⏱️ length not available
Key Takeaways
The whole move in the 10-year yield is explained by 150 basis points of repricing toward hikes, not by fiscal risk
Six hikes' worth of pricing arrived in six or seven months
He says the term premium has not risen at all, and that the claim is checkable on the terminal
One hike and then easing next year is his base case, and he thinks the Fed will signal nothing
His 10-year forecast a year out is nearer to 4% than 6%, from a starting point of 5%
A 3% 30-year real yield is a reason to buy nominal Treasuries, not inflation-protected ones
TIPS are illiquid, and illiquidity is what hurts in the risk-off that would justify owning them
American sports teams are worth more than British ones because there is no relegation to cut off the cash flows
1. One Hike, Then Easing
Keene opened by putting Jan Hatzius of Goldman Sachs to him: a rate increase may come, but not three, four or five, because the move to a higher rate regime is a one-off whose shocks recede. Major took the same side.
"Yeah, it could be a one and done, Tom." He said the chairman would share the common view of a near-term inflationary impulse from the artificial-intelligence and infrastructure build-out, while expecting disinflation to come through in the longer run, meaning next year.
The comparison he draws is seven months old. On 27 February, before the war in the region, the 10-year yield was below 4% and the market implied three cuts. Now it is 5% and prices three hikes.
"So one thing I would say is that you've had a six rate hike move in the space of six, seven months. That's 150 basis points. That explains the entirety of that 10-year yield shift and a bit more, really."
His base case is one increase and then a turn: "So I could see one hike and then next year we could be back into the easing mode. It's the war in this region that has ruined the best laid plans."
2. Term Premium Didn't Move
The bearish case on bonds that Major rejects runs fiscal policy, bond supply and an inflation risk premium together in one breath. He said he does not see it.
"The term premium hasn't gone up. People have been claiming that it has. It has not gone up. You can see it on the Bloomberg terminal."
The curve has flattened, he said, because it has been pricing in the rate hikes — which is the behavior of a market repricing policy, not one demanding compensation for risk.
Inflation expectations are controlled, with spot inflation a bit higher.
Keene's own framing of the day was that everyone has a different read. He said the press conference was like Howard Johnson's, with 28 flavors and an opinion for each.
3. Nearer to Four Than Six
Asked directly where the 10-year note will be a year from now, Major gave a number and then offered to bet on it.
"I'd say nearer to four than six."
"And so the starting point is five. So if we had a sportsman's bet on this, we could bet a coffee." Keene set the terms as a coffee each way, with the line at 5%.
Major's answer to the bet was that Bloomberg has plenty of coffee.
He then recalled being asked the same kind of question earlier in the year. With yields at 4%, Jonathan Ferro asked him what was more likely, the 10-year falling toward 3% or West Ham United staying up in the Premier League. "So it was an impossible question because I didn't know how to answer it, in fact."
The scoreboard since: "5% and West Ham are top of the championship, just saying."
4. Give the Chairman Time
Asked what he will be listening for from Kevin Warsh, Major argued for patience with a chairman dealt an unusually bad hand.
"I'm tempted to give him a break in that he's still in his honeymoon phase." The global geopolitical backdrop has been very difficult, he said, and what has happened is pretty unprecedented.
"I think we have to give it time. And I think committing to a series of rate hikes is very unlikely here."
On what the statement will actually contain, he was flat: "He's not going to signal anything."
5. Nominals, Not TIPS
Keene raised the 30-year inflation-adjusted yield, which he called back to once-in-a-lifetime highs well above 3%, and asked what it means. Major said he had taken calls on exactly that subject the same morning.
"3% real yields, basically 2% higher than the Fed's indication of its neutral rate." Even meeting in the middle, he said, leaves the real yield 100 basis points high.
The obvious trade is inflation-protected Treasuries, and he says the obvious trade is wrong. At a 3% real yield TIPS should be good value. "The problem is TIPS investors, TIPS traders know that if you had a risk-off, you'd be in one of the worst possible products."
The reason is liquidity. In a risk-off, illiquid instruments such as TIPS would massively underperform, and markets would start to price disinflation and deflation — which is the scenario in which the inflation protection stops being worth anything.
So the position is in ordinary Treasuries: "So I think the positioning should favor nominals. So you buy nominals because the real yield is high."
"Inflation expectations are under control. And the real yield, I think, is quite juicy."
6. Why US Teams Cost More
Keene spent several minutes explaining English football relegation to an American audience — asking listeners to imagine the Mets, the Giants or the Angels being sent down to Triple-A — and Major turned it into a valuation argument.
Keene's setup was the derby: West Ham, now in the Championship, visiting Millwall. Major said the rivalry goes back to the docks. "Well, it is, and it's quite historical because it goes back to the Docklands and the workers in the docks and their rival teams and rival unions." It predates him, he said, and is more his father's era.
His own verdict on the derby: "The truth of it is we don't really care because we're a premiership team and they're not."
Asked how a club climbs back, Major went to the finance instead. "So the reason the valuation of American teams is so much higher than their British equivalents in sporting terms is because the discounted cash flow is going to be more attractive when you don't have the relegation problem."
The mechanism is the revenue line, not the trophy. "You see, the thing is the revenues and the income from TV and sponsorship, it collapses when you get relegated." A franchise that cannot be demoted has a floor under its broadcast and sponsorship income, and that floor is what a buyer is paying for.
Bonus Insights
Keene disclosed that he had shaved his beard that morning because Tottenham scored a goal against Liverpool the day before.
Keene introduced Major as bringing his heritage on the Pacific Rim in London to the desk, and closed the segment by thanking him for the briefing.
Major's bottom line is that the repricing of Fed policy, not fiscal deterioration, accounts for the entire move in long Treasury yields — so a 3% real yield is an opportunity in nominal bonds rather than a warning, and the 10-year a year from now is closer to 4% than to 6%.
Products, Companies & Tools Mentioned
Tradition (The interdealer broker where Major is Global Macro Advisor)
HSBC (Where he ran fixed income research for 24 years)
Goldman Sachs (Jan Hatzius's one-and-done view, which Keene put to him and he largely agreed with)
Bloomberg Terminal (Where he says anyone can check that the term premium has not risen)
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