Market Strategy
by Talley Leger, Chief Market Strategist
July 24, 2026
The Bond Market Isn’t Screaming – You’re Just Listening to the Wrong People
When Treasury yields rise, investors tend to make the same diagnosis: Debt. Deficits. Inflation. Vigilantes. It’s the financial equivalent of blaming strange noises coming from under your car’s hood on a blown transmission. Sometimes it’s true. Most of the time, however, it isn’t. What if the bond market’s saying something less dramatic?
Positive “Carry” Trade
One of my favorite charts in our 2026 Mid-Year Macro Outlook compares nominal gross domestic product (GDP) growth with the 10-year Treasury yield. That “oldie” but “goodie” relationship illustrates the “carry” trade or net return you make simply by holding an asset for the long run, despite its near-term price fluctuations. Think of it as the income that an asset generates while sitting in your portfolio, minus the ongoing costs to finance, insure and / or store it. Essentially, being paid to wait is the foundational concept beneath the developed world and our entire financial system.
In 1Q26, the US economy – including prices and volumes – expanded by 6.1% year-over-year (Y/Y), while the 10-year Treasury yields 4.7% today. That’s not restrictive, it’s accommodative. In other words, the economy’s earning at least 1.4 percentage points (ppts) more than it costs to finance itself, thereby supporting the ongoing mid-cycle expansion (see the chart below).
Paid to wait: The economy’s earning 1.4+ ppts more than it costs to finance itself
Sources: FRED, WCG, 07/23/26. Notes: NBER = National Bureau of Economic Research.
When to Worry
History suggests that our growth engine usually stalls when the cost of money overtakes the economy’s ability to generate income. Fortunately, however, our fuel gauge indicates we’re currently running on a full tank of gas.
Why all the anxiety? Because investors routinely confuse higher yields with tighter policy when they’re not the same thing. Much of this year’s climb in medium- to long-term Treasury yields hasn’t been driven by expectations for runaway inflation or a panicking Federal Reserve (Fed). Rather, the bond yield backup has been driven by something far less sinister: A higher “term premium” or the extra compensation investors demand for lending money over longer time horizons. That isn’t a red light, it’s simply the price of “interest-rate risk” returning to normal.
Market Metaphor: If your automotive insurance premium went up because you bought a faster car, that’s different than your premium rising because you started driving blindfolded. While both scenarios would likely cost more, only the latter would guarantee a crash.
The same logic applies to bonds. Higher Treasury yields – propelled by stronger growth, heavier supply and normalizing “interest-rate risk” – tell a completely different story than yields ignited by a spiraling “inflation scare:”
- One reflects rational decision-making.
- The other reflects fear.
From my lens, today’s bond market looks more like the former.
Why It Matters
Too many investors are still trading as if bonds are trapped in the zero interest rate, negative real yield purgatory of the post-pandemic era when they aren’t. For the first time in years, fixed income finally offers something wonderfully old-fashioned: Income.
Moreover, bonds can potentially provide diversification again if economic growth settles into a “non-inflationary equilibrium,” as we expect. Specifically, 2% real GDP growth, cool “core” inflation, and a Fed that’s disciplined enough to avoid creating problems that don’t yet exist.
Admittedly, it isn’t an exhilarating forecast. But markets and investing don’t reward excitement, they reward correctly identifying what the crowd’s getting wrong. In my view, one of the biggest misconceptions right now isn’t that Treasury yields are too high or low. It's the knee-jerk reaction that every rise in yields is automatically bad news. Sometimes, a higher interest rate isn’t a police siren. Sometimes, it’s just the market reminding us that a healthy economy should pay investors a reasonable rate for lending it money.
If you like what you see and want more striking visuals, please check out our 2026 Mid-Year Macro Outlook entitled, “Dynamic Optimism in a Non-Inflationary Equilibrium,” or reach out to your WCG financial advisor for a copy.
Portfolio Strategy
by Jim Worden, CFA®, CMT®, CAIA®, Chief Investment Officer
July 24, 2026
Remastered 2066
This is a fictional thought experiment about 2066; references to future laws, tax policies, investment structures, technologies, healthcare systems, and economic conditions are hypothetical and should not be interpreted as predictions. The following is speculative opinion, not a forecast or investment, tax, or legal advice, and does not reflect the views of The Wealth Consulting Group. The opinions are wholly my own.
A few years ago, I took up listening to classic jazz music. Lately, I’ve been listening to Miles Davis. I noticed that Miles Davis’s instrumental recording of the Rodgers and Hart standard “It Never Entered My Mind” was remastered in 2026 as part of the Miles ’56 box set, 70 years later.
Both the title of the song and the recent remastering got me thinking about what hasn’t entered our minds and how things might look 40 years from now. My natural optimism keeps me from writing anything too crazy, dystopian, or apocalyptic. Take everything you read here with both a grain of salt and an open mind about what might be. Many of these ideas will likely prove to be completely wrong, but some might not be too far off. Did we really think 40 years ago that we would have self-driving cars and extremely intelligent computer models capable of sophisticated reasoning?
2066
With millions of satellites in low Earth orbit and hundreds of millions of robots, drones, and cameras, the world is an extremely safe place. There is no homelessness, no hunger, no geopolitical conflict, and no pollution from burning gas, oil, or coal. Everything runs on electricity, and there is plenty of it, generated by nuclear, geothermal, and far more optimized and efficient solar arrays. Half of the data centers are in space, and half are on the ground. The rainforests have come back. The massive pile of garbage in the ocean is gone, and the beaches are clean. We have optimized how vegetables and fruits are grown while eliminating harmful forms of genetic engineering.
We have cured all forms of disease or, at least, slowed them down significantly. Everyone has efficient, non-rationed healthcare, and the taxes are not grievous for working people to bear. Corporations that have made trillions of dollars from AI subsidize many aspects of daily life in exchange for tax breaks.
Parking lots are almost nonexistent. Driving is now a sport. Highway patrol officers work mostly in control centers, supervising traffic and seeking to prevent accidents caused by the rare faulty self-driving cars still on the road. Deaths from drunk driving: zero. Deaths from texting, speeding, falling asleep at the wheel, or simply not being a good driver: also zero. Cars and AI are heavily regulated, but in a way that promotes safety. Many people own cars, and those cars are income-producing investments. They must be checked regularly and upgraded with the latest firmware and other components to comply with current safety standards.
Millions of autonomous vertical takeoff-and-landing (VTOL) robotaxis populate the skies. They are used for local, short-distance trips. We don’t need nearly as many roads or bridges anymore. Teleportation nodes dot cities of more than 100,000 people, allowing people to travel freely, safely, and virtually instantly to thousands of locations.
When diseases do occur, clusters of quantum computers, orchestrated by the smartest AI agents and humans working together, identify, develop, and deliver vaccines or other cures that are safe and effective within days of a disease being discovered. Astronauts now have a colony on Mars, where they have discovered new elements that can be used to build better spacecraft and equipment. Submarine drones and aerial drones gathering samples from deep underwater and deep in the rainforests, respectively, have also uncovered new bacteria and life forms that are useful in curing disease.
Not everything is connected. There are still places—national parks—deliberately kept quiet and low-tech, where the network thins out and people can truly live off the grid for a while. It turns out that people needed that as much as they needed the technology.
As for portfolios and investing, everyone has tax-free accounts. Social Security has been replaced by “safety net accounts,” managed by a consortium of tightly regulated investment institutions, with personalization and risk budgeting for each investor. Transaction costs are gone, and fees are almost nothing. Some people have tax-deferred accounts in which taxes are deferred until they are ready to retire, whether early or late. The longer they wait, the lower their taxes. Speculative investors pay more in taxes. Quant investors pay very little, while buy-and-hold stock investors and index investors pay almost no tax if they wait more than five years between trades.
Transactions are recorded on a blockchain in real time. The paperwork and intermediaries are gone. Investors can also tokenize their own portfolios, making even traditionally illiquid holdings far easier to trade, assuming there’s a market for them. Mutual funds are not a thing in 2066, and neither are ETFs. Tokenized portfolios and individual securities are what people buy and sell.
Cash doesn’t exist. Credit cards don’t exist. Instead, people use tokens backed by assets: a home, a car, a portfolio, or a business. Interest rates are virtually zero. Default rates are virtually zero. Insurance is underwritten by AI models using highly individualized measures of risk, and uninsured risks are not shifted to others. Inflation is low, and money-supply growth is low and stable. Real-time data and analysis give central bankers a day-by-day view of economic growth. There are no more surveys that take months to collect and analyze.
All local, state, and national voting is captured and tabulated in less than an hour through a few taps on a phone and a single thumbprint. National currencies no longer exist. People transact using a universal digital credit denominated in units derived from what was once the U.S. dollar. Global trade is optimized and efficient, based on comparative-advantage principles while protecting precious resources. Gone are the days when foreign companies came in and stripped a country of its resources, only to leave it worse off than before.
I’m sure every reader has their own “it never entered my mind” ideas about how things might look and feel different in the future. Regardless of the challenges we sometimes face, I am optimistic that the future will be bright.
Definitions
The National Bureau of Economic Research (NBER) defines a recession as a significant decline in economic activity that is spread across the economy and lasts more than a few months. Recessions are the periods between peaks and troughs of the business cycle.
10-year US Treasury note: A government debt security issued by the US Department of the Treasury that pays the holder a fixed interest rate every six months and matures in 10 years, at which time the principal amount is returned to the investor.
GDP: The value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production. GDP is also equal to the sum of personal consumption expenditures, gross private domestic investment, net exports of goods and services, and government consumption expenditures and gross investment.
Fed: The central banking system of the United States. It regulates commercial banks, manages the nation’s money supply, and sets monetary policy to promote maximum employment and stable prices.
Interest rate risk: The danger that a change in market interest rates will reduce the value of a fixed-income investment like a bond. When interest rates rise, bond prices fall, causing losses for investors who sell before maturity.
Term premium: The extra compensation or higher yield that investors demand for holding a long-term bond instead of a series of short-term bonds. That added return protects investors against the increased uncertainty and price volatility of locking their money up over time.
Artificial Intelligence (AI): Computer systems designed to perform tasks that typically require human intelligence, including learning, reasoning, pattern recognition, prediction, and decision-making.
Blockchain: A distributed digital ledger in which transactions or records are stored across a network and typically secured using cryptographic methods.
Data Center: A facility that houses computing infrastructure, including servers, networking equipment, data storage, and related systems.
Exchange-Traded Fund (ETF): An investment fund whose shares generally trade on an exchange and that typically holds a portfolio of securities or other assets.
Low Earth Orbit (LEO): An orbit relatively close to Earth, generally extending to approximately 2,000 kilometers above the Earth’s surface.
Mutual Fund: An investment company that pools money from investors to purchase a portfolio of securities or other investments.
Quantum Computing: A developing form of computing that uses principles of quantum mechanics to process information and potentially solve certain problems differently from conventional computers.
Robotaxi: A vehicle designed to transport passengers without a human driver, generally using autonomous-driving technology.
Safety Net Accounts: A fictional retirement and social-support account structure imagined for purposes of this 2066 thought experiment; it does not describe a current U.S. government program or investment product.
Social Security: A U.S. federal program that provides retirement, disability, and survivor benefits to eligible individuals and families.
Tokenization: The process of representing ownership of, or rights to, an asset through a digital token or digital record.
Universal Digital Credit: A fictional unit of exchange imagined for purposes of this 2066 thought experiment; it does not describe a current currency, security, or payment system.
Vertical Takeoff and Landing (VTOL): The capability of an aircraft to take off and land vertically rather than requiring a conventional runway.
Disclosures
This article is a fictional thought experiment regarding what the world could look like in 2066. It is speculative opinion and is not intended to constitute a forecast or prediction of future economic conditions, technological developments, laws, regulations, tax policy, investment markets, healthcare developments, or government policy. Many or all of the scenarios described may never occur.
Nothing contained herein constitutes investment, tax, legal, accounting, medical, or other professional advice. References to hypothetical investment accounts, tax treatment, digital assets, tokenization, market structures, interest rates, Social Security, or other financial arrangements describe an imagined future and do not represent current law, regulation, investment products, or tax treatment.
References to technologies or scientific developments, including artificial intelligence, quantum computing, autonomous transportation, space-based data centers, teleportation, and medical advances, are hypothetical and should not be interpreted as claims regarding currently available technology or the likelihood or timing of future technological developments.
The views and opinions expressed are solely those of the author and do not necessarily reflect the views of The Wealth Consulting Group. Readers should consult their own qualified financial, tax, legal, medical, or other professional advisers regarding their individual circumstances.
The views expressed are for informational and educational purposes only and are subject to change without notice.
This material is not intended as, and should not be interpreted as, individualized investment advice or a recommendation to buy, sell, or hold any security, sector, industry, or investment strategy.
References to specific companies, securities, sectors, or industries are for illustrative purposes only and should not be construed as investment recommendations.
Investing involves risk, including the possible loss of principal. Investments in a specific industry or sector may involve greater risk and volatility than more diversified investments.
Past performance is not indicative of future results. No investment strategy can guarantee a profit or protect against loss.
Forward-looking statements, including views about future demand, pricing, supply, or industry cycles, are based on current expectations and assumptions and are subject to risks and uncertainties. Actual results may differ materially.
Data and information are believed to be reliable, but accuracy, completeness, and timeliness are not guaranteed. Source documents should be retained for factual claims, third-party research references, and company-specific data.
Portfolio holdings, allocations, and risk budgets are subject to change based on market conditions, client objectives, and investment guidelines.
The author, firm, clients, or related persons may hold positions in securities mentioned and may buy or sell those securities without notice, subject to applicable policies and regulations.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment Advice offered through WCG Wealth Advisors, LLC, an SEC Registered Investment Advisor. WCG Wealth Advisors, LLC and The Wealth Consulting Group are separate entities from LPL Financial. Index performance is shown for illustrative purposes only and does not predict or depict the performance of any investment. Past performance does not guarantee future results.
All information in this report is believed to be from reliable sources; however, WCG Wealth Advisors, LLC, makes no representation as to its completeness or accuracy.
In general, stock values fluctuate, sometimes widely, in response to activities specific to the companies as well as broad market, economic and political conditions. Stock investing involves risks, including fluctuating prices and loss of principal. Value investments can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time. (135-LPL) International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets. (93-LPL)
The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors. (122-LPL)
Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss. (28-LPL)
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. (26-LPL)
Standard deviation is a historical measure of the variability of returns relative to the average annual return. If a portfolio has a high standard deviation, its returns have been volatile. A low standard deviation indicates returns have been less volatile. (131-LPL)
This is for educational / general purposes only, does not constitute investment, tax or legal advice and should not be relied on as such. This is not to be construed as an offer to buy or sell any financial instruments. Any strategies discussed are not intended to be relied upon as the sole factor in making an investment decision for any individual. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully before investing. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested in directly. These comments should not be construed as recommendations but as an illustration of broader themes.
Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions; there can be no assurance that actual results will not differ materially from expectations. In addition, forward-looking statements, including index targets or market scenarios, are hypothetical in nature, reflect current views and assumptions and are subject to change based on market and economic conditions and are not guarantees of future performance. This is a hypothetical example and is not representative of any specific investment. Your results may vary. (88-LPL) Scenario outcomes are illustrative and not predictive. This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.
The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. Indexes are unmanaged and cannot be invested in directly. (102-LPL)
Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value
Publication Date: July 24, 2026
For Public Use in the US
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