The Fed may be ready to cut in September, but the bond market? Not exactly throwing a party. Macro strategist Jim Bianco, president of Bianco Research, warned that the bond market—particularly long-dated Treasuries—is sending a clear message: It doesn’t want these rate cuts.

In an interview with Bloomberg TV on Tuesday, Bianco indicated that despite Fed Chair Jerome Powell‘s dovish pivot at Jackson Hole, where he strongly signaled a shift toward prioritizing labor market stability over inflation, the long end of the yield curve isn’t cooperating.

The 30-year Treasury yield has barely budged since early August, even after Powell cracked the door wide open to easing.

“For all the talk that the Fed’s going to cut in September, the bond market’s had a month to think about it—and it’s up one basis point,” Bianco said.

In other words, the bond market isn’t just shrugging off a rate cut—it may be quietly resisting it.

Bianco’s reasoning is clear: the long end of the curve doesn’t believe rate cuts are sustainable without fueling more inflation.

While Powell is selling the idea of “adjusting policy” due to shifting risks—i.e., softening labor data—investors see the risk of rising inflation if the Fed eases too early.

Bianco warned of “fiscal dominance,” the idea that the Fed becomes a tool for government borrowing by keeping rates artificially low. That may help in the short term—but it could break everything later.

“If the Fed cuts to make it cheaper for the government to borrow, they’re essentially giving up the ability to raise rates again,” Bianco explained. “And that’s how you get spiraling out-of-control inflation.”

Bianco isn’t just worried about the Fed’s credibility. He’s concerned about effectiveness.

If the Fed cuts in September, but long-term yields continue to drift higher due to inflation fears or global bond market trends, the impact of that cut will be diluted—maybe even counterproductive.

“We’ve already seen this play out in Europe and the UK,” he said, pointing out that long-term borrowing costs in those regions have risen despite rate cuts.

That’s the paradox Powell may now face: cut rates to support jobs, but inadvertently send borrowing costs up for businesses and homeowners.

Overlaying the Fed’s policy dilemma is a constitutional showdown brewing in Washington.