It’s not a good day in the markets, Here’s a recap.
Add rising interest rates to Trump’s “tiny price to pay” list along with gasoline, diesel, fertilizer, and numerous other items.
30-Year Back Over 5.3 Percent
The 30-year long bond hit the highest yield in decades.
Highest yield since August 2007.
Bessent’s Pea Shooter
Jim Bianco on Bond Selloff
The Fed has No Navy
Mortgage Rates
Mortgage Rates are another item for the tiny price to pay list.
Don’t Worry, It’s Global
Oil
- Brent Crude is back above $100 to $100.26 per barrel, up $2.34
- West Texas oil jumped $2.20 to $95.21.
Diesel will top $6.00 within days.
Bessent’s Buyback Operation Disappoints
CNN reports Bond yields rise after Treasury Department announces size of buyback operation
Bond yields rose Wednesday after the Treasury Department said it would buy back up to $6 billion of government bonds, putting a dollar figure on the operation first announced last month.
The 10-year US Treasury yield rose to 4.85%, its highest level since 2023. If the 10-year yield ends the day above 4.82%, it would be the highest closing level since October 2023.The Treasury Department on August 19 announced it would at least double the size of bond buybacks from September to November. The announcement on Wednesday pins the buybacks at up to $6 billion, triple the size of the standard $2 billion operation.
CNBC reports 10-year Treasury yield jumps to highest since 2023 despite Bessent’s $6 billion bond buyback plan
Treasury Secretary Scott Bessent said the department will buy back $6 billion of longer-date government debt. The news comes after Bessent announced the operation last month, saying the Treasury would at least double debt repurchases.
Yields moved higher despite the increased buyback as some on Wall Street believed the repurchases by Bessent would be even bigger. Peter Boockvar of The Boock Report said some on Wall Street believed the buyback would be as much as $7 or $8 billion.
Notes to Bessent
- Buybacks do not change fundamentals.
- $6 billion, even $20 billion is nothing in a trillion dollar market.
The Fundamentals
Yesterday, I discussed Seven Forces Support High and Rising Bond Yields
There are national and international forces pressuring yields.
Bessent has adopted a strategy of mind over markets.
Bessent’s strategy is not exactly working.
Er…once again…how is a “rate hike” going to bring down oil prices, which are THE primary cause of price inflation?
This is *not* your dad’s wage-and-price-led inflationary spiral.
Enough hikes will kill demand, crash the market, and end the AI bubble
The Hurst cycles for the 10 year US bond yield show strengthening uptrend.
30+ weeks into the present “40 week” cycle and new cycle highs are still being made, which indicates longer cycles are strong to the upside. I’m watching for a cycle top any day with the “40 week” cycle nest of lows due in late October.
See the CRB commodity index ratcheting up.
CRB Commodity Index – Price – Chart – Historical Data – News
Inflation expectations are growing.
Don’t worry about the market or economy as taco has promised the Iran war won’t over until the day after the mid-term elections and gasoline prices fall to the “$2.”
Has taco ever failed to deliver on his predictions?
Bessant’s claims to omnipotence in the bond markets is a sign of weakness. You don’t need to spew rhetoric when you actually hold all the cards. Had he kept his mouth shut I would have thought the Yen would bump higher. Now I’m not so sure.
Rising oil price is poison to the Yen and if the Fed raises then the BOJ must follow in hikes. Not good for an export economy.
Someone should inform the Japanese prime minister she is not dealing with a mentally stable administration. I can’t imagine what the prim and proper Japanese think of Bessant’s claims over their economy.
Has anyone verified bessant’s credentials?
yes. was a failure at running his own money management companies. he made his resume by working for soros. the coffee boys at soros operation all did great and looked like genius. btw soros books on trading are exceptional.
Can you say “crowding out”?
El Erian: “the US Treasury just paid 4.834% at issuance, the highest in almost twenty years (August 2007), despite strong demand at the auction.”
Isn’t the strong demand exactly because the rate is high? Where else can you get similar rate?
If you all give me a billion dollars, I’d end the war in 24 hours.
Promise
How can you look at everything in this post; geopolitical checkmate, oil screaming upward with inflation and interest rates following, record equity valuations, a lunatic President sanctioning the world, a desperate Treasury Secretary, and a confused Fed, and not expect a market crash?
Am I missing something?
> a lunatic President
controlled (more or less) by you_know_whom
wrong. the israelis are useful idiots for the amerikan empire. of course they have big pull in DC, but do not be confused. the UK set them up to be useful idiots. we just took over.
Yes. You are absolutely ignoring the alternative facts.
It always takes longer than you expect….
That long term chart is fantastic because it very clearly shows the 20 year period of financial repression which followed WWII. And this is for nominal returns, it was even worse for real returns. But the WWII debt did gradually get inflated away. I will repeat my previous comments and again suggest that we are entering another long period of attempted financial repression. That’s why although I agree with Mish and others that the Fed should raise rates now, I am unconvinced that they will raise rates now. I will be happy to be wrong if they do raise rates.
They want to get debt/gdp back down from the current 120%, so they will run inflation hot while spewing distractions. The problem is that Trumps economic ignorance is making it much harder…. Itll be interesting to see how this plays out. Its definitely gonna be expensive for most citizens in real terms
Total clownshow, totally predictable. This administration has no idea what its doing and its going to cost the USA bigly. Get ready for a reduced standard of living
Our beef prices are loudly arguing that you’re correct.
The billionaires, squillionaires and quadrillionaires will feast on fat steaks. The peons will get mystery meat.
Mad cow for the masses.
Eat horse flesh!
More like humans will be eating the pets.
Of course, the same MAGAs that went into hysterics when Trump made such claims about Haitians will be glad to eat Fido at Dear Leader’s behest.
Beef prices at the farm are lower than last year,
Costs much to get the finished product to market: $6.00 Diesel
Farmers, feed lots, processors and truckers need to profit or the
entire distribution stops!
“The Treasury Department said it would buy back up to $6 billion of government bonds” is a highly misleading statement as it implies the debt is being retired to the low information reader. Treasury is actually exchanging long term debt for short term debt and total debt is not diminished. I would consider this misinformation at best.
Ten and longer-term bonds offer stability in terms of future service costs as the interest rate is fixed for the term of the bond. Contrast that to bills that are rolled over every month to a year and therefore subject to increased service costs much sooner as rates rise as they are now. The country has a debt problem and gimmicks like this do not address the root problem and will probably make the current situation worse. I recommend Bessent go before congress and lay the cards on the table face up by basically testifying that this is a problem only congress can fix by cutting spending below revenue and commence paying down the debt. That will be painful, therefore politically unpopular, but it will also reduce the borrowing needs which over time will result in lower interest rates. He may want to show a few slides from the link to bolster his case:
How Much Credit Growth Does It Take to Expand Real GDP? – MishTalk
If congress does not make the hard choices, market participants will and the ruthless participants will not be considering consequences of their choices, only the means to cut their losses to a minimum.
Bessent doesn’t want to make the case for fiscal discipline and Congress wouldn’t listen even if he did.
Been waiting for these bond vigilantes for a while.
Glad to see them turning up this time…they should have showed up 5 years ago as far as I am concerned
Chubby Checker Bessent be doin’ The Twist. This will calm markets, and yields will drop way down because this administration knows exactly what it is doing. The world has so much confidence in them. Just wait and see. Nothing can go wrong.
The problem is, Congress will do whatever Trump wants, and he wants an additional half-Trillion of military spending.
So Bessent can’t get there. He’s stuck with a little water pistol trying to put out a five-alarm fire.
To quote the late great Alan Abelson “It matters when they say it matters”. The “They” being the Vox Populi. The Vox Populi is the driver of mkt’s. And all Bessent is doing is showing the Vox Populi how desperate we’re becoming. IMHO his blowing Treasury credibility with completely hollow talk is completely burning moral capital. He’s burning down the house in broad daylight and the Vox Populi is noticing.
I expect he’ll go down as one of the Worst Treasury Secretaries ever. An utter POS along with much of the Trump crew. They’re all in a race to the bottom.
Bessent can join is master DJT in that respect
Them and the Keystone Kabinet
I concur from this side of the pond, an utter POS.
In response to the U.S. sinking three civilian Iranian oil tankers, Iran has again attacked American bases in Jordan. Casualties will be hidden from the public. Reagan had the sense to pull the marines out of Lebanon. Trump and his crew are too stupid to change course. Or too controlled. He needs a serious bitch-slapping in the midterms.
“[Trump] needs a serious bitch-slapping in the midterms“
NO, don’t you want the war to end?! President Trump just said today that he believes the Iran war will end “immediately” after the US midterm elections in November. Do you want to give up our only chance of ending the war, he might lose his support and decide not to follow through with ending it if we don’t all support his candidates! /s
And you believe DJT….
Quatloo was using sarcasm.
I know you’re kidding. I’m seriously worried that he might want to use a nuke after the election, and I’m not certain anyone would contravene his order.
There isn’t anything you can do about it so stop worrying. Let. It. Go.
True. Worried wasn’t really the right word, since I don’t think about it much. I just think it’s a serious possibility.
Get some potassium iodide tablets for the children in your life.
And the price of gas would be below $2.00/gallon, and if the R’s win both houses in November he will “give” everyone $5000K. Feel better now right? /S
“Or too controlled.”
You are getting warmer.
Well that depends entirely how your investment portfolio is positioned….I read the headline and nearly had an instant profitgasm.
I sold covered calls on XLE today because when oil gets too hot, TACO steps in to spill the beans out of the TACO. Not matter what TACO does, the profits are locked in.
The 30 year and 20 year at 5.3 ish is great opp to buy-write more TLT. I’m collecting nice dividends each month from TLT then sell calls when it pops after a TACO.
There is always a way to make money in markets and when TACO is in charge it is even easier because he telegraphs every move like a predictable toddler.
But eventually the wheels will fall off the bus on this 70 mph ride and it won’t be pretty.
Just watch and…
Do worry, Trump, Walrus, GOP, and democrats will find a way to make things even worse.™
FED policy is crude, rude and largely ineffective…because its designed to be the handmaiden of the banks in “normal” economic times and their bail bondsman when they serially destabilize the economy with their monopoly paradigm of Debt Only for the creation and distribution of all new money.
However, the central bank basically has god-like power to create and distribute money, and if we’d integrate the new monetary and economic paradigm of Monetary Gifting strategically into the present monopoly paradigm of Debt Only that the banks wield…with a policy of a 50% Discount/Rebate policy at regular consumer and also financial retail sale…it would double everyone’s purchasing power and also simultaneously double the potential demand for every commercial agents’ goods and services…which is the very definition of good economic times.
Model it with the double entry bookkeeping operations of equal debits and credits that sum to zero…until you see it.
You’re welcome!.
Hahahahaha!
Thanks. That was my best laugh today!
Next time make it a 100% discount so everything is free!
Just keep modeling its beneficial economic and monetary effects…dunce.
The terminally orthodox mocked and warned about the disaster of changing the last monopoly paradigm humanity dealt with: the Roman Catholic Church’s paradigm of Salvation Via Roman Catholic Sacraments ONLY. Consult history.
I have literally zero clue what you’re trying to suggest here.
I’m suggesting that the present paradigm for the creation and distribution of all new money (the concept of Debt ONLY meaning all new money must ONLY be created as debt…is an unnecessarily restrictive monopoly. I know this paradigm is long acculturated, but if you just look at it you realize that its a non-competitive APPLIED concept exactly analogous to the Catholic church’s monopoly paradigm which The Reformation ended. Once you realize its nature and see that the 50% Discount/Rebate at retail sale resolves virtually all of the deepest problems of modern economies…the scales fall from your eyes.
Try it, you’ll like it.
“The Fed has no Navy and desperately wants a deal.”
The Fed should ally with Iran for protection.