U.S. May Be Sliding into Stagflation as Bond Yields Spike
Torsten Sløk, Chief Economist at Apollo Global Management, is sounding the alarm on a growing threat in the U.S. economy: stagflation.
As bond yields surge and inflation expectations rise, Sløk believes that markets are flashing warning signs reminiscent of the 1970s — a period marked by low growth and stubborn inflation.
“This is essentially stagflation,” Sløk told CNBC on Friday. “By definition, tariffs mean higher inflation, and it means lower growth.” His comments come amid a sharp rise in bond yields, driven by mounting fears over the U.S. budget deficit and potential inflationary impacts from President Donald Trump’s proposed tariff policies.
The 10-year U.S. Treasury yield recently spiked to 4.61%, a significant climb from its early April lows, and is now sitting at levels suggesting that investors are pricing in economic stagnation with persistently high prices. Meanwhile, the 2-year yield has dropped to about 3.96%, reflecting short-term concerns about economic weakening and expectations of future rate cuts.
Consensus forecasts for U.S. GDP growth have begun to trend lower, even as inflation indicators such as core PCE — the Fed’s preferred gauge — continue to tick higher. Sløk pointed out that this divergence reinforces the stagflation narrative, which is notoriously difficult for policymakers to tackle since cutting rates could fuel inflation while raising them may suppress growth further.
Other major voices on Wall Street are echoing Sløk’s concerns.
Kosta Gushterov
Reporter at Coindoo
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