Bob Michele, who runs the global fixed income, currency and commodities group at JPMorgan, tells Mike Santoli that the move in yields is a demand for compensation rather than a call on the Fed, and that there is value in bonds again for the first time in years. This summary also carries the show's own reporting from across the hour — the August close, the G20 in Asheville, the bond and energy desks, Tim Cook's last day at Apple and the news update — which the other Closing Bell Overtime summaries from this episode do not repeat.
👤 Guest: Bob Michele, head of the global fixed income, currency and commodities group at JPMorgan
🎙️ Host: Mike Santoli, who anchors Closing Bell Overtime from the Nasdaq market site and writes CNBC's Market Memo newsletter
👥 Also on: Megan Cassella, CNBC's Washington correspondent, reporting from the G20 in Asheville; Rick Santelli, CNBC's Chicago-based bond reporter; Pippa Stevens, who covers energy for CNBC; MacKenzie Sigalos, who covers Apple for CNBC; Brandon Gomez, on the news update
📰 Published: 31 August 2026 on the Closing Bell podcast feed
🟣 Apple Podcasts | ⏱️ 42 min
Key Takeaways
The backup is in real yields, and it is about competition for capital rather than the Fed
Sovereigns everywhere are funding themselves and, in his words, "They're competing with hyperscalers."
The second reason is "policy confusion" — nobody knows the Fed chair's reaction function
Inflation expectations are still anchored near 2.3%, which he finds surprising given a hawkish Jackson Hole and rising oil
The compensation investors are demanding is real yield, not inflation protection
He thinks the 10-year tests 5%, and that the crowd talking about 5% is the reason it may not get there
"We were at 3.9%. We're now at 475. So we've had 85 basis points in backup."
"Do we get to 490, 495? I think so."
The cash on the sidelines wants a Fed commitment before it buys
"They want to hear from the FOMC that if they have to go three, four rate hikes, they're willing to do it."
A year of rising yields has cost bond holders nothing, and that is the case for owning them
Roughly 75 basis points of backup on the five-year and a zero return: "You didn't lose money. That's the value of all the yield."
A core bond fund near a 6% yield; a municipal fund at 3.8%, or about 6.3% taxable equivalent
Bessent is pressing every finance minister at the G20 to cut all economic ties with Iran
His stated aim is to create the conditions under which Tehran wants to negotiate, with the Strait open
Santelli's line on the 10-year is four and three-quarters, and a close above it is the highest since January 2025
Above that the next level takes the chart back to October 2023
Tim Cook's last memo is about culture, and Phil Schiller hands the App Store back to Eddy Cue
August Ends Up 2.5%, and Almost All of It Was Earned in the First Four Days
Santoli opened from Studio B at the Nasdaq market site with a lower tape. The Dow was down more than 300 points, the S&P 500 down about a quarter of a percent, the Nasdaq composite off slightly, and the Nasdaq 100 squeaked into the green on a late spurt in Tesla.
"Tech was one of the only two S&P sectors in the green today, and that's despite losses for most of the Mag 7 names." Amazon fell 2% as the Federal Trade Commission sued the company for allegedly deceiving advertisers
Energy was the other green sector, with oil up more than 2% as fighting escalated between the United States and Iran
The month itself was better than the day. "And this concludes trading for August. Another good month for the markets, 2.5% gain for the S&P 500, though basically all in the books by August 4th", Santoli said, with more than 3.5% for the Nasdaq composite and the Nasdaq 100
At the G20, Bessent Presses Finance Ministers to Cut Iran Off
Megan Cassella reported from Asheville, North Carolina, where Treasury Secretary Scott Bessent spent the day convening finance ministers, central bankers and some top chief executives. She said the war with Iran was the topic on everyone's mind, and that in every meeting with a foreign finance minister Bessent is pressing them to get on board with the United States and cut off all economic ties with Iran. She also reported that Bessent says the United States does not have to see that outcome in order to achieve its goals.
Bessent's own framing of the aim was negotiation, not collapse. "The goal here is to create the conditions that they will want to come to the table. And the president's been very clear. They have to give up their nuclear program. They have to turn over the highly enriched uranium. And they have to stop their support of proxies. And the Strait has to be open."
On whether Bessent and Fed Chair Kevin Warsh are pulling the market in opposite directions, Cassella said the two are presenting a united front. "They traveled together here to Asheville on the same government plane from Andrews Air Force Base." — and three times that day the two men sat side by side giving opening remarks at three different sessions
Bessent told CNBC they are on the same page on the bond market, and that both believe the U.S. bond market is the most resilient in the world right now
Santoli's reading of Bessent on buybacks: the Treasury's buyback operations are not meant or really capable of changing the equilibrium level of bond yields, but may make the market more liquid and keep yields closer to fair value
What comes out of it, and when. A communique is expected by the end of the day tomorrow, followed by a closing press conference late in the afternoon
A Treasury official told Cassella that Bessent is expected to hold at least 11 bilateral meetings on the sidelines
A G7 finance ministers' meeting hosted by France, this year's G7 president, was set for that evening, with Canada in the room — which Cassella said is where trade and tariffs might come up
Santoli's caveat on communiques: "the news is often what's not in the statement in addition to what's in it"
Cassella said there is a lot of joint and collective work going on between the sanctions and the currency intervention, and that she hopes the statement sheds some light on it
Santelli: Four and Three-Quarters Is the Line, and a Close Above It Is the Highest Since January 2025
Rick Santelli called in from Chicago with the 10-year sitting on the level that has repeatedly stopped it.
"It's not only a key level. It's just sitting right on this four and three-quarters area" — a level he said has been a stopper on a number of occasions, while other long-dated sovereign yields keep moving higher in France, the EU and, to a lesser extent, the UK and Japan
The close that matters is not the one most people watch. Real technicians use the 5 o'clock Eastern close rather than the 4 o'clock equity close: "That's the true close of the U.S. cash market."
If the 10-year closes above 474 it would be the highest yield close going back to January of 25, he said
Above that, the chart jumps back more than two years. The next level takes the market to October of 23, a range of 493 to 499, with 499 hit on October 31st of that year. The market may have traded intraday above 5% then, but did not close above it
"The last time a 10-year note closed above 5%, or at 5%, goes all the way back 19 years to July of 2007."
"However, the long side of the U.S. has really woken up over the last several weeks."
Stevens: Brent Above $90, and the Strain Shows Up in the Tanker Market
"Brent is back above $90 after the first military strikes between the U.S. and Iran in a month over the weekend, but a pretty muted move, given the market has sort of become accustomed to these flare-ups." — Pippa Stevens
The show's own sourcing on why it still matters: Stevens cited CIBC's Rebecca Babin, who called the shift from purely economic pressure back toward military action significant, because it shows that even if kinetic action is not the preferred U.S. path, Iran still has ways to escalate that force its hand
More oil is getting out of the Middle East, Stevens said, thanks in part to ship-to-ship transfers
The bottleneck is in the specialized vessels. "LNG vessels are not transiting at the same rate." They are highly specialized and much more expensive than very large crude carriers, so the insurance burden is higher and the price response is bigger
Qatar owns a fleet of ships, one of which was targeted last month
Product tankers are also not moving through as quickly, which she said is contributing to tight fuel markets
On Venezuela, Stevens reported the President announcing what he called "a historic deal with Venezuela for 65 billion barrels of oil reserves", and said the announcement was met immediately with caution about how long any actual increase in production would take
Michele: The Compensation Being Demanded Is Real Yield, and It Is About Crowding and Confusion
Santoli asked how much of the move was a re-evaluation of the Fed after Warsh's comments and how much was the trend already in place.
"It feels like the trending move." What Michele found interesting about the session was the continuation of the backup in real yields
"Inflation expectations remain relatively anchored at about 2.3%, which is surprising, considering that Chair Warsh, highlighted inflation, and yet oil prices rise."
The first reason bond investors want more real yield is competition for capital. "One is the competition for capital. You've got sovereigns globally, not just the U.S. looking to fund themselves. They're competing with hyperscalers."
The second is that nobody knows the rules. "And the second is, frankly, policy confusion. We still don't know what the Fed Chair's reaction function is." He added that the Treasury says different things seemingly every week and the geopolitics keep moving
"So us in the bond market want a higher real yield to accommodate that."
Santoli's own name for it is a what-if premium — compensation or cushion for a list of unknowns rather than a forecast of any one of them
Michele: Warsh May Have Talked the Rest of the FOMC Into Hiking
Santoli noted that short-term yields rose with Warsh's comments and that implied odds of a September hike had climbed a fair bit above 50%, with data still to come before the meeting.
"Yeah, it sounded like a very hawkish Jackson Hole speech."
There is a data path that gets the Fed off the hook, and Michele laid out the arithmetic. PCE lands before the next FOMC meeting; if the monthly core reading comes in at two-tenths of a percent, the three-month annualized rate drops from 3.1 to 2.4 percent, which he said would be a sufficient improvement
The question he was left with is about persuasion rather than data. "But I also step back, and I wonder, he gave such a compelling argument. Did he just talk the rest of the FOMC into hiking rates?"
Santoli's response was that it would not have taken much: the committee was on the border and already leaning that way
Santoli put the long-end puzzle to him. One camp argues a hike would demonstrate inflation resolve and bring long yields down, but long yields have risen as hike odds have risen
Michele: We Test 5%, and the Crowd Talking About It Is Why We May Not Get There
"We were at 3.9%. We're now at 475. So we've had 85 basis points in backup."
"I think we're going to test 5%."
"The fact that everyone's talking about 5% means we probably don't get there. Do we get to 490, 495? I think so."
The buyers are waiting on a signal from the Fed, not a level. Michele said a lot of the cash on the sidelines is looking to come into the market and wants to see a commitment to rate hikes and to reining in inflation
"They want to hear from the FOMC that if they have to go three, four rate hikes, they're willing to do it."
Michele: A Year of Rising Yields Has Cost Bond Holders Nothing
Santoli asked whether the moves had created value for someone sitting in an investor's seat.
"Yeah, there's a lot of value." Even with about 75 basis points of backup on the five-year this year, the bond market has returned zero
"So, okay, it's not great. it's not the equity market. You didn't lose money. That's the value of all the yield."
The yields available now are the argument. "Now you could put money into a core bond fund, get close to a 6% yield. You could put money into a municipal bond fund. It's a 3.8% yield. That's on a taxable equivalent about 6.3%."
Santoli agreed there is a buffer in there now, because the yield itself cushions the price move
"Yeah, absolutely. We get it. There's yield in the bond market again. How about that?"
Tim Cook's Last Memo Is About Culture, and Schiller Hands the App Store Back to Eddy Cue
MacKenzie Sigalos reported on Tim Cook's final day as chief executive of Apple. In his last note to employees, she said, he looks past the company's financial record and focuses on the culture he believes will outlast his tenure.
"In a letter obtained by Bloomberg, Cook also says that he takes enormous comfort in handing the company to John Ternus", whom Cook described as one of the few people who understands how to build products that change the world
It was a last day for a second executive as well. Phil Schiller is stepping away from his two remaining responsibilities: "The App Store now goes back to Eddy Cue after an 11-year break, and Schiller gives up oversight of the events team."
"Now, he'll become an Apple fellow sticking around as a sort of de facto advisor."
Sigalos said the move was planned well in advance. Internal sources told her employees were informed in mid-August, part of a long-planned handoff mirroring the choreographed transition that put Ternus in the top job
It further elevates Cue, already one of Apple's most powerful executives, who now takes on more of the services business
Santoli asked about the stores, which he said draw relatively little commentary now compared with the years when their productivity and their domestic headcount were talked about constantly — are they fine as they are, or is the strategy changing?
Sigalos said the retail footprint is being reworked around the new lineup. Reporting indicates Apple is changing the way new products are laid out in stores, which she said matters most when a form factor changes, and is the kind of thing a company does when a new lineup is coming
The September hardware event lands next Wednesday
A leak discussed on the show on Friday points to a foldable phone in just over a week, plus 10 unnamed devices on the product roadmap; Sigalos said a consumer will want to walk into a physical store and try a new form factor, so stores may have to change how they are organized
Santoli's response: "Boy, I suppose there better be a foldable phone pretty soon when they have that event."
The News Update: the Ballroom, State Farm and a Storm Heading for Texas
Brandon Gomez ran the CNBC news update.
"The Supreme Court just ruled that President Trump can continue construction on the White House ballroom while a legal challenge proceeds." It follows a similar ruling more than a week earlier, in a case brought by the National Trust for Historic Preservation
Los Angeles County sued State Farm over its handling of insurance claims after last year's deadly wildfires, alleging survivors were made to wait too long for benefits
"State Farm has said more than $6 billion in claims have been paid off, and the number will eventually top $7 billion."
The National Hurricane Center issued a tropical storm warning along the Gulf of Mexico from Galveston, Texas to western Louisiana, with the system expected to strengthen into a named storm overnight and make landfall in Texas the next day
"Forecasters say some areas could get as much as nine inches of rain."
Michele's bottom line is that the move in yields is a price for uncertainty rather than a forecast — investors want more real yield because sovereigns are competing with hyperscalers for capital and because the Fed's reaction function is unknown — and that after a year of that repricing the bond market pays enough to be worth owning again.
Products, Companies & Tools Mentioned
JPMorgan (Michele's firm; he runs its global fixed income, currency and commodities group and is buying the argument that yields now compensate for the risk)
Amazon (Down 2% on the day as the Federal Trade Commission sued it for allegedly deceiving advertisers)
Apple (Tim Cook's final day as chief executive, John Ternus taking over, Phil Schiller handing the App Store back to Eddy Cue, and a September hardware event next Wednesday)
CIBC (Rebecca Babin's read, cited by Stevens: the shift from economic pressure back to military action is significant because Iran still has ways to escalate)
State Farm (Sued by Los Angeles County over wildfire claims handling; says more than $6 billion has been paid and the total will top $7 billion)
National Trust for Historic Preservation (Suing the administration over the White House ballroom construction the Supreme Court has now allowed to continue)
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