THE MORNING RANT: Bad News! Coffee Prices and Bond Yields Are Up...or Down

Until November 2028, the prevailing theme of the legacy media’s coverage of economic news is going to be “More bad news for the Trump presidency…” With its credibility burned up, most of us will have no problem disregarding it.

But irrespective of that politically-driven negativity, there are certain business topics that are usually reported as bad, no matter who is President, with an emotional emphasis on why this is problematic.

With that introduction, there’s no great thesis to today’s post other than that I am weary of those business and economic topics I have an interest in being subject to journalistic framing that tends to contain some level of fear-mongering or worrisome foreboding rather than simply focusing on the economic facts. I’ll quickly talk about two of them: Bonds and Coffee.

Coffee is my favorite beverage, and all aspects of the coffee business is interesting to me, from where it’s grown to where it’s sold. But of course, the news being reported about coffee is always bad. If coffee prices are up, it’s bad news. If coffee prices are down, it’s bad news. If bad weather causes a shortage of coffee, it’s bad news. If a perfect growing season leads to a glut of coffee, it’s bad news.

A version of this headline has been in most newspapers in recent weeks: “Bad news for coffee drinkers as prices set to keep going up” [Yahoo – 3/06/2025]

Brazil and Vietnam are the two biggest coffee exporters, and both have smaller crops this year. In Vietnam it’s due to coffee farmers replanting much of their cropland to grow durian (a fruit) for the Chinese market. In Brazil, the crop is smaller due to bad weather.

“Brazil drought punishes coffee farms and threatens to push prices even higher” [AP – 9/20/2024]

But just a few years ago Brazil had a record crop, and that was also reported as bad news, of course.

“Brazilian coffee glut weighs on global growers; Record output drives down prices and piles pressure on farmers” [Financial Times – 01/29/2019]

As such, there should be little respite for the world’s coffee farmers who have been struggling under low prices brought on by Brazilian output.

“Why are Many Coffee Farmers Abandoning their Crops?” [Merchants of Green Coffee – 4/09/2021]

In 2019, Arabica beans traded at 86 cents per pound, representing a 14-year low for prices. According to analyses, coffee prices have fallen to less than a third of their level in 1960, despite being one of the world’s largest export commodities, and the seventh-largest agricultural export.

Enjoy your coffee. Pay the market price. And disregard the doom reporting about this wonderful beverage.

For most of my adult life, the liquid portion of my investment portfolio was exclusively stocks (mutual funds.) But with retirement looming in less than a decade, and with interest rates on bonds having risen dramatically from the near-zero rates that prevailed for so long, I have balanced my portfolio somewhat to include some bond funds.

Therefore, I am starting to pay attention to financial reporting on bonds for the first time. Guess what? It’s usually bad news.

If interest rates rise, it’s bad news for bond investors because the principal value of existing bonds decreases.

If interest rates decrease, it’s bad news for bond investors because they’re going to start earning less interest.

Here are examples of how both a reduction in interest rates and an increase in interest rates were reported as bad news.

1) Here is a bad news story about an interest rate cut in 2024…

“Why Fed Rate Cuts Are Hurting Treasury Bonds” [Barron’s – 9/19/2024]

It looks like the party in the bond market is over. The Federal Reserve made a bold move on Wednesday, cutting interest rates by half a percentage point instead of starting slow with a quarter point.

That is bad news for bond investors…

2) And here is a bad news story about an interest rate increase in 2025…

“It's been a brutal start to the year for the bond market” [Business Insider – 01/10/2025]

The US bond market is off to a tough start in 2025.

This has been reflected in spiking yields, which trade inverse to the price of bonds. On Friday, US Treasury yields surged to their highest level since October 2023.

The catastrophism and emoting in general interest news stories is bad enough. Can’t I even read about what is going on in the bond market or the coffee business without being warned why this is bad news? The fact that it’s almost always bad news makes me dismiss the grim analysis altogether.

[buck.throckmorton at protonmail dot com]

posted by Buck Throckmorton at 11:00 AM

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