A famed permabear warns the bond market is hinting that double-digit inflation could be on the horizon

• Bonds are flashing a sign that inflation could be a big problem again soon, Albert Edwards says.
• The famed permabear pointed to the rise in Treasury yields as markets price in hotter price growth.
• Headline inflation could rise well into the double digits, he estimated.

The bond market is sending a bad signal about inflation, according to one Wall Street permabear.

Albert Edwards, a global strategist at Société Générale, said he believes bonds are flashing a worrying signal about the economic backdrop and the outlook for stocks. That's because US Treasurys look like they're slipping into a secular bear market — for bonds, that means prices are falling while yields rise — something that could hint that inflation is on track to rise to its highest level in nearly half a century, Edwards wrote in a note to clients on Thursday.

"Inflation is heading up to 1970s levels, not (only) because of the US/Iran war, but due to the ominous secular themes of fiscal dominance and political weakness," Edwards said, referring to how higher national debt levels are inflationary and make investors more cautious about holding government bonds.

Edwards pointed to the recent rise in Treasury yields, a sign that demand for government bonds is already cooling as investors eye the economic impact of the Iran war and price in hotter inflation.

The 10-year US Treasury yield was around 4.28% on Thursday, up 32 basis points since the start of the Iran war.

The 2-year and 30-year Treasury yields have also recently hit levels not seen since the Great Financial Crisis, Edwards said.

He added that he expects headline inflation to rise between 10% and 20% on a yearly basis, in line with its highs 50 years ago. US inflation peaked at around 11% in the mid-1970s, then fell and rose again to 13% in 1980.

"Despite recent US bond stability, we are in a global secular bond bear market," he later added, suggesting that rates would stay higher for longer due to inflation risks.

Inflation has been top-of-mind for investors over the last month, who have been carefully tracking the rise in oil prices amid the Iran war. The central fear is that higher energy costs could feed into price increases in other goods, fanning inflation and slowing economic growth.

A bear market in bonds also sours the outlook for risk assets, Edwards said, pointing to the potential impact of higher rates on stocks in particular.

Rate cuts, which are generally bullish for risk assets like stocks, have come into question for the rest of 2026 amid inflationary concerns stemming from the Iran war. Markets see a 64% chance that the Fed will leave rates unchanged from current levels by the end of this year.

Edwards, who describes himself as an "uber bear," has long held a bearish view of markets, even as risk assets rallied to record highs in recent years.