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Thoughtful Money with Adam Taggart

What Bonds, Oil & Gold Are Telling Us | Michael Lebowitz

July 23, 2026

AI Summary

5 min read

"Something very strange has happened over the last [period] since basically the Iranian conflict started," says Michael Lebowitz, partner at RAA and regular contributor to the Thoughtful Money podcast. He's referring to a market puzzle: bond yields are rising sharply, but inflation expectations are actually falling. For anyone trying to read the markets, this disconnect is the key to understanding not just bonds, but oil, gold, and the broader complacency that Lebowitz sees beneath the surface.

The Bonds-Oil Connection Has Overridden History

Lebowitz’s starting point is blunt: "If you tell me where the price of oil is going, I'll tell you where the price of bonds are going." Historically, the strongest driver of bond yields has been inflation expectations — a relationship that has held for decades. But since the escalation of conflict with Iran, that link has broken. Five-year inflation expectations, as measured by the TIPS market (where investors put real money to work), have actually declined from about 2.46% to 2.28% since the conflict began. Yet five-year bond yields have risen from roughly 3.62% to 4.30%.

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What you'll learn

  • 1 (02:10) **Complacently Optimistic** - Lebowitz frames the current market as calm on the surface with furious activity underneath, like a duck.
  • 2 (03:26) **Bonds Are Now Driven by Oil, Not Inflation** - The historical steering wheel for bonds (inflation) has been replaced by oil prices due to the Iranian conflict.
  • 3 (05:50) **The Great Disconnect: Yields vs. Inflation Expectations** - Bond yields are rising while inflation expectations are falling, creating a Jekyll-and-Hyde market.
  • 4 (08:42) **Why the Disconnect? The War & Deficit Premium** - The bond market may be worried about deficits from war spending or a future oil shock, not a current credit crunch.
  • 5 (12:12) **The Transitory War Premium** - Lebowitz believes the weird bond market functions will normalize once the oil-driven event passes.
  • 6 (14:06) **The Oil Equilibrium: A Self-Regulating Ceiling & Floor** - Oil prices are currently in a band that drives diplomatic action between the US and Iran.
  • 7 (15:31) **Punchline: Lebowitz Takes the Under on Bond Yields** - He expects bond yields to fall by year-end, assuming the Iran situation doesn't explode.

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Guests on this episode

Michael Lebowitz

Show Notes

What are bonds telling us right now about investor confidence & expected inflation?What is oil telling us about the prospects to an end to the Iran-US war?And what are gold prices telling us now that they may have found a bottom?Portfolio manager Michael Lebowitz joined us for a livestream to answer these questions as well as audience Q&A. Watch the replay here.

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