Episode Description

On August 17 and 18, 2026, the yield on the 30-year U.S. Treasury bond climbed above 5.3% — its highest level since 2007, back when the iPhone hadn’t even shipped yet and the word “subprime” was just entering the public vocabulary. On this week’s Financial Hour, Tom Dupree, Mike Johnson, and Michael Dawahare broke down why that number matters, what the U.S. Treasury Department is doing about it, and — more importantly — what it means for anyone who’s retired or approaching retirement and living off a portfolio.

The team walked through Treasury Secretary Scott Bessent’s decision to expand the government’s bond buyback program, why the Treasury is repurchasing old, low-coupon “off-the-run” bonds, and what Bessent meant when he said he has “asymmetric information” the market doesn’t. Mike Johnson explained the mechanics in plain terms: the Treasury doesn’t hold these bonds on its balance sheet the way the Fed does — it swaps them out and reissues shorter-term debt, which theoretically frees up the plumbing in the bond market without actually solving the underlying supply-and-demand problem driving yields higher in the first place. The U.S. Treasury’s own announcement confirms the buyback size is at least doubling, from a $2 billion to a $4 billion per-operation ceiling, effective September 9, 2026 — exactly the increase Tom, Mike, and Michael were reacting to on air.

From there, the conversation turned to what’s actually happening underneath the surface of the stock market. Economist Ed Yardeni’s “K-shaped economy” — where some parts of the economy do well and others fall behind — is evolving into what he now calls a “G-shaped economy,” with earnings-driven strength showing up in previously out-of-favor sectors. Coca-Cola hitting an all-time high the same week Walmart’s stock dropped roughly 10% on strong-but-complicated earnings was Exhibit A. Tom and the team also discussed two specific holdings in DFG client portfolios — a commercial real estate mortgage REIT and Verizon — and why research-driven, patient investing in “forgotten” sectors has been paying off for income-focused clients this year.

On the mortgage REIT position, the team went deeper than “buy the dip.” The company — sponsored by a large institutional manager with global real estate data and research reach — makes commercial real estate loans, historically concentrated in office properties. When one or two of those loans showed early warning signs, the company increased its loan-loss reserves, which shows up on paper like a write-down even though the loan stays on the books and no cash has actually been lost. The stock sold off on the news. Tom and Mike explained why they added to the position instead of walking away: this management team was conservative during the “nuclear winter” for office real estate a few years ago, has since been letting legacy office loans run off, and is redeploying that capital into multifamily, healthcare, and industrial loans — property types with materially better performance right now. Because these are shorter-duration loans, the portfolio’s characteristics can shift relatively quickly as old loans mature and new ones get written. That combination — a real dividend yield in the double digits today, a management team with a track record of conservative accounting, and a portfolio actively repositioning into stronger property types — is why DFG treated the sell-off as a buying opportunity for income-focused clients rather than a reason to sell.

Verizon came up for a different reason: SpaceX’s Starlink satellite service and the ongoing question of whether it can realistically compete in the cellphone business. Mike and Tom were skeptical, pointing to a CNBC analyst’s explanation that a satellite-based “cell tower” sits roughly 220 miles away compared to the two or three miles most people are used to today — a gap that raises real questions about latency and practicality for everyday phone calls, whatever the marketing promises. What both hosts agreed on is that the more durable asset is compute capacity: Starlink’s parent currently leases out some of that capacity, with the option to use more of it for its own future needs, not unlike how Amazon Web Services has become a larger and more important piece of Amazon’s business than its original retail operation.

The team also used Walmart’s earnings reaction as a pulse check on the broader consumer. Despite what management called one of its healthiest quarters, the stock dropped roughly 10% the day of the release — driven largely by new government pricing rules on pharmaceuticals that took effect in the second quarter, layered on top of a business that’s now roughly half grocery. Because the market had to digest several moving pieces at once, short-term traders reacted to the complexity rather than the underlying strength Walmart itself described on the call. On the broader consumer picture, Mike Johnson noted wage growth is positive for the first time in a while, and inflation and affordability on goods have ticked slightly better — partly offset by a 20–30% rise in gas prices over the past month. The team also flagged a rollback of tariffs on beef imports from South American trading partners, aimed at easing supply after herd sizes shrank in recent years — welcome relief on one grocery bill line item, even as lower-income households continue to feel the most pressure on housing, auto, insurance, and everyday food costs.

Tom also used part of the hour to deliver a message he called maybe the most important thing he’d say all year: it’s not how much your portfolio earns on average — it’s when the losses happen.

“Here’s something most people approaching retirement have never heard, and it could be the most important thing I say. It’s not how much your portfolio earns, it’s when it loses.”

If your retirement account drops 10% in year one and you’re already pulling money out to live on, you’re drawing from a smaller pool going forward. Do it again in year two, and — as Tom put it — “you may never recover. Even if the market bounces back, the damage is already done.” Wall Street tends to talk in long-term averages, but as Tom noted, “averages don’t pay your electric bill in a down market.” That’s the whole case for building retirement income around dividends rather than around hoping the market cooperates on your withdrawal schedule. FINRA’s own guidance on managing a retirement portfolio makes the same point: your time horizon shrinks once withdrawals begin, so reassessing how much investment risk you’re carrying — and where your income is actually coming from — matters more with each passing year of retirement.