Market Meltdown or Positioning Washout?

The S&P 500 fell sharply last Thursday, driven by tech and chip stocks that had risen 15 to 17 times before peaking in the summer. The very next day, payrolls came in at 168,000 with unemployment down to 4.1% and jobless claims at their lowest since 1969. A market selling off into the strongest labour data in years is telling you something, and it may not be what the headlines say.Behind the sell-off sits the steepest hedge fund de-grossing in at least a decade, a Democratic midterm win that threatens state by state limits on data centres, and a wave of equity issuance, including the Anthropic IPO at a valuation of 1.1 to 1.5 trillion dollars, arriving just as companies stop buying back shares. Meanwhile core PPI is running above 5% while core CPI sits just over 3%.Elvis sits down with veteran macro trader Jonny Matthews, 25 years of institutional experience at Brevan Howard and Citigroup, to unpack why the equity bull market is not over, what rising producer prices and rents mean for core CPI, and why more than two Fed hikes next year look likely.In this episode:Why Thursday's sell-off was a positioning washout, with vol control funds and leveraged ETFs forced to sellSemiconductor and memory stocks up 15 to 17 times before peaking in the summerTexas and other states restricting data centres, and who pays for the gridGoldman raising its 2030 data centre capacity forecast from 217GW to 273GW, with 8.5 trillion dollars of capexJobless claims at the lowest since 1969 in a labour market 70% bigger than it was then168,000 new jobs, unemployment at 4.1%, and cyclical sectors suddenly driving the gainsCore PPI above 5% against core CPI above 3%, and why rents will push it higherWhy a December Fed hike looks likely, and why the ECB and Bank of England have more to doJonny has spent 25 years trading macro at the highest institutional level. This is not retail speculation or headline chasing. It is rigorous, independent analysis from someone who has sat at the table.New to SuperMacro?Get 30 days of our Daily Note entirely free at www.super-macro.com Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Tech credit default swaps have doubled from 50 to 100 basis points, Meta's free cash flow has just turned negative, and French spreads to Germany are back at European debt crisis levels. Four of the G7 central banks meet this week, and the market is trying to decide whether this is the end of the AI bull market or just the first real test of who gets to borrow. The bigger thread is the competition for capital. Net equity issuance was negative for two and a half decades, then turned sharply positive in the last two quarters. Add heavy corporate bond supply and governments running deficits of 5.5 to 6%, and everyone is queuing up for the same investors. Elvis and Jonny Matthews unpack why the AI build out is pushing up the cost of capital, what the French bond blow-out means for Europe, and why the central banks are likely to hold now and signal a hike in December. You may also notice that Jonny isn't in our usual London studio this week, instead he's joining us remotely from Vegas. In this episode: Why Jonny closed his S&P 500 put spreads and does not think the AI bull market is over Neo cloud stress: shares roughly half their summer level and bonds at 80 cents on the dollar Hyperscaler free cash flow turning negative as Meta lifts capex guidance to 135 to 145 billion Jevons Paradox in AI: token prices falling while corporate spend grows 300 to 500% a year Tech sector five year CDS doubling from 50 to 100 basis points Net equity issuance, bond supply and sovereign borrowing all competing for the same capital French ten year spreads to Germany, and why Jonny and Elvis disagree on Le Pen and the election The Fed, Bank of Canada, ECB and Bank of Japan all expected to hold, with a December hike on the cards Jonny has spent 25 years trading macro at the highest institutional level. This is not retail speculation or headline chasing. It is rigorous, independent analysis from someone who has sat at the table. New to SuperMacro? Get 30 days of our Daily Note entirely free at www.super-macro.com 0:00 Cold open: will France's problem stay isolated? 0:26 Welcome, with Jonny in Las Vegas 1:10 Is this the end of the AI bull market? 2:05 Neo cloud stress: shares halved, bonds at 80 cents 3:17 Hyperscaler free cash flow turns negative 4:11 Meta lifts capex guidance to 135 to 145 billion 5:04 Cost of capital and the return on AI spend 5:35 Jevons Paradox and surging token usage 7:08 Ramp data: AI spend per employee 7:54 Will the neo cloud problems spill over? 8:15 Tech CDS doubling from 50 to 100 basis points 9:04 Governments and companies competing for capital 10:02 Net equity issuance turns sharply positive 11:26 Why yields have to stay higher 12:08 $1 trillion of AI spend, around 3% of GDP 13:42 The French sovereign debt blow-out 14:32 Spain and Italy: why they look healthier 15:26 Moody's, the French budget and the 2027 outlook 16:01 Elvis and Jonny disagree on France and the ECB 17:00 Le Pen and the election 17:55 Net debt to GDP against bond yields 19:27 Hot inflation prints and PPI leading CPI 19:52 Fed, BoC, ECB and BoJ expected to hold 21:01 Are the October meetings a nothing? Warsh and Fed guidance 22:53 Sign-off and the Daily Note Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

The US Treasury is buying back $4 to 6 billion of long dated bonds at a time, against $5.4 trillion outstanding and $900 billion of new issuance every year. Jonny calls it a pea shooter pointed at a battleship. Bonds made last week’s front cover of The Economist, a cover with a record of marking turns. When everyone is suddenly worried about the long end, where does it go next? The real test is the 4 November refunding. If the Treasury cancels the 20 year auction or trims the tens and thirties, the first reaction could be a rally, but the paper still has to go somewhere, and Jonny expects it to flood into bills and tie funding more tightly to the Fed. Add Judy Shelton and her proposal for gold backed Treasury bonds, and debasement fears are never far away. Elvis sits down with veteran macro trader Jonny Matthews, 25 years of institutional experience at Brevan Howard and Citigroup, to unpack why a relief rally in long bonds is one to sell, what the Treasury could still do at the November refunding, and why he is buying gold upside while staying short the long bond. In this episode: Why the ten year and thirty year are consolidating, and the risk of a 6% handle on the long bond The Economist cover asking whether bonds will blow up, and oil at $10 a barrel in 1999 Why $4 to 6 billion buybacks barely dent $5.4 trillion of 10 to 30 year debt What the 4 November refunding could change, and why bills would absorb the difference Judy Shelton’s zero coupon Treasury bonds backed by gold, 261 million ounces at $42 an ounce Why nominal GDP outgrowing the interest rate cuts debt to GDP, and why low inflation is not coming back Zillow and Apartment List rents turning up, vacancies falling and mortgage rates at 7.5% Why he is buying gold upside and selling Treasuries into strength Jonny has spent 25 years trading macro at the highest institutional level. This is not retail speculation or headline chasing. It is rigorous, independent analysis from someone who has sat at the table. New to SuperMacro? Get 30 days of our Daily Note entirely free at www.super-macro.com 0:15 Welcome, and what Super Macro offers 0:41 Where the ten and 30 year yields stand after the sell-off 1:09 Bonds make the cover of The Economist 2:10 Why Jonny isn’t ready to buy bonds yet, and the risk of 6% on the long bond 2:34 Events that could squeeze bonds, starting with the Treasury buybacks 3:40 The maturity profile of the debt and the $5.4 trillion buyback target 4:44 The 4 November refunding announcement and what Treasury could do 6:24 Why cutting long end supply would be a chance to sell 7:06 Bill issuance, debasement fears and pressure on the Fed 8:31 The two new Treasury advisers 11:33 Judy Shelton and her plan for gold-backed Treasuries 12:33 The US gold stock, valued at $42 an ounce 14:09 How much power the advisers really have 14:50 Inflating away the debt with nominal GDP growth 15:58 Why the era of ultra low rates is over 16:43 Core inflation and the risk from rents 17:15 The rent indices that lead the CPI 18:25 Why rental disinflation is fading fast 20:26 Why Jonny is buying upside in gold and staying short Treasuries 21:05 Wrap up and what subscribers get in the Daily Note Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

France's deficit is heading for 5.4% this year, the government's plan to cut it to 5% is unlikely to survive the National Assembly, and a presidential election lands in April. French yields keep climbing, the two year Bund now yields 175 basis points less than Treasuries, and the VIX hasn't moved. The Nasdaq hit an all time high on Friday. Jonny called the ten year breaking through 4.5% months ago, and it has been a great year for his short. Now he has scaled back. Options protection has become expensive as the MOVE index surges, and with only about five basis points of a hike priced for November fed funds, he is leaving the October Fed meeting alone. Elvis sits down with veteran macro trader Jonny Matthews, 25 years of institutional experience at Brevan Howard and Citigroup, to unpack why the French deficit is dragging Europe's bond markets lower, why Jonny has cut his Treasury short, and why equities still aren't flinching at higher yields. In this episode: France's 5.4% deficit, a reduction plan to 5% that is unlikely to pass, and an April presidential election with Le Pen and Melenchon leading Japanese yields rising fast enough to close the yield pickup that once sent JGB investors into Treasuries and European bonds Two year Bund yields falling 175 basis points below Treasuries as investors rush into the safe haven Why Jonny has scaled back his ten year short, and why a surging MOVE index makes options protection so expensive November fed funds pricing just five basis points of a hike, and why Jonny won't trade the October meeting Q3 S&P 500 earnings growth expected near 30%, and why the VIX has not moved Why hedge funds have a ton of information but not necessarily better information, and how Jonny forms his own views Jonny has spent 25 years trading macro at the highest institutional level. This is not retail speculation or headline chasing. It is rigorous, independent analysis from someone who has sat at the table. New to SuperMacro? Get 30 days of our Daily Note entirely free at www.super-macro.com 0:00 Cold open: are France's presidential candidates really extremists? 0:13 Welcome back, Elvis is fresh from Las Vegas 0:53 The ongoing bond sell-off and the rise in French yields 1:33 France's 5.4% deficit and an April presidential election 2:32 Why yields are rising: inflation, strong growth and second round risk 4:29 Japan's bond market and the vanishing yield pickup 5:14 Is Europe facing the same problem? 6:03 Why Jonny has scaled back his ten year Treasury short 7:55 Why options protection is so expensive: the MOVE index 8:31 Why the VIX hasn't moved 9:40 How Jonny holds up against hedge funds with more information 13:01 Jonny's Fed funds trade, and why he is sitting out October 15:38 Political risk in Europe and fears of a new sovereign debt crisis 16:58 Bunds as a safe haven, the 175 basis point spread and the euro 18:44 Why Jonny runs a low capital trading strategy 20:38 Equities: why stocks are shrugging off higher yields 22:11 How narrow the rally is, and the AI capex risk 23:13 Wrap up and what the Daily Note offers Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

The 30 year Treasury yield traded above 5.5% this morning. The 10 year is now clean through 5%, a level that held as a ceiling for two years. Whatever was capping yields broke last week, and Jonny doesn't think it's coming back. Behind the move sits a US economy still running hot. The Atlanta Fed's GDPNow estimate has Q3 growth tracking at 5%, powered by consumption growth above 3% and an AI-driven investment boom, with last week's S&P Global composite PMI printing its strongest read yet. The case for bonds staying cheap keeps getting harder to dismiss. Jonny walks through why the bond market's multi-year ceiling finally gave way, what a botched auction and a shrunken buyback programme reveal about real demand for Treasuries, and why he thinks the neutral rate of interest has reset permanently higher. In this episode: The 10 and 30 year yields breaking through levels that had capped them for two years A 5 year note auction with the biggest tail in almost five years and the lowest bid to cover since 2018 The Treasury's buyback operation managing just over $4 billion of face value against $5.4 trillion outstanding in the maturities it targets Atlanta Fed GDPNow tracking Q3 growth at 5%, with consumption growth above 3% and investment spending on an AI-driven tear US federal debt to GDP above 120% once the Fed's own holdings are counted, and why the Fed itself is losing money on that stock Italy's BTP-Bund spread down from over 400 basis points in 2012 after cutting its deficit toward 3% of GDP, while France's OAT now yields more with its own deficit at 5.4% Why a strong labour market raises the risk that higher energy costs turn into second round wage and price effects Jonny has spent 25 years trading macro at the highest institutional level. This is not retail speculation or headline chasing. It is rigorous, independent analysis from someone who has sat at the table. New to SuperMacro? Get 30 days of our Daily Note entirely free at www.super-macro.com 0:00 Intro: why fiscal concerns finally start to matter 0:22 Welcome, and why last week was a great week to be bearish bonds 0:55 The multi-year ceiling on 10 and 30 year yields finally breaks 1:43 What actually drives bond yields, and the factors behind last week's move 2:53 Inflation, a healthy labour market, and the risk of second round effects 4:02 Why fiscal concerns matter once they start to matter 4:56 Italy's 2012 sovereign debt crisis and the BTP-Bund spread 5:55 France's 5.4% deficit and a gridlocked election 6:24 French bonds now yield more than Italian bonds 6:52 The US debt trajectory, and why the real debt to GDP ratio is over 120% 7:44 How the Fed's own balance sheet is losing money on its bond holdings 9:08 Retail sales, consumption growth, and a red hot AI investment boom 10:01 Breaking down the Atlanta Fed's 5% GDP tracking estimate 11:37 A surprisingly strong S&P Global PMI print 13:13 A brutal five year note auction, and the worst demand in years 15:37 Why Treasury's buyback operation fell short of even its own promise 17:42 The buyback in context: $4 billion against $5.4 trillion outstanding 19:12 The bottom line: the neutral rate of interest has reset higher Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

The Fed hiked 25 basis points last week, and the market's answer was to rally. The S&P is up 3.5% since the meeting, the Nasdaq 4.5%. Retail sales control group spending jumped 1.4% in August against a forecast for half a percent. Whatever that hike was meant to do, it isn't slowing anything down yet. That isn't the story everywhere else. The BOJ's own hawks are on their way out. Two doves have already been appointed and the two remaining hawks will end up being replaced by more doves. The Bank of England held rates, even with more energy driven inflation coming in October and January, because the UK labour market has been shedding jobs for almost two years and there's no second round effect to fear. Jonny walks through why this hiking cycle won't be a coordinated one like 2022, why the Fed still has room to go further than its G10 peers, and why US households have never been in better shape to keep spending through it. In this episode: Only the RBA has hiked more than once this cycle, while the BOJ, Fed and ECB all move at very different speeds The BOJ's newest board members dissenting against a hike days after taking their seats, and why the doves are about to take control Less than 5 basis points priced for the BOJ's October meeting UK payroll jobs shrinking for most of the last two years, with two more energy price hikes still coming in October and January Retail sales control group spending up 1.4% in August against a forecast for half a percent Household wealth to income at an all time high, and debt to disposable income at a two decade low Real fed funds rate only just turning positive, and why Jonny thinks the Fed has another 50 to 100 basis points to go Jonny has spent 25 years trading macro at the highest institutional level. This is not retail speculation or headline chasing. It is rigorous, independent analysis from someone who has sat at the table. New to SuperMacro? Get 30 days of our Daily Note entirely free at www.super-macro.com Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Oil is up roughly 12% over the past week, hitting a US economy already at full capacity, 4.1% unemployment and payrolls averaging 106,000 a month. That's the kind of shock that turns into services and core inflation rather than fading on its own. Fed funds futures already price an 87% chance of a hike this week. The real question is what happens to the other 75 basis points still priced in after that.The other supposed backstop already cracked. Bessent had promised to at least double the Treasury's bond buybacks, with the street expecting 5 to 7.5 billion. The first operation only spent 3.6 billion against 10.5 billion of bonds dealers offered, because Bessent wouldn't pay up for the rest. The 30 year yield broke through 5% anyway, and the 10 year touched a level it hasn't held since 2007.Jonny sits down with Andy Constan, founder and chief investment officer of Damped Spring Advisors and his former boss at Salomon Brothers, to unpack why the sell-off has further to run, why Treasury's own supply games matter more than talk of QE, and why he thinks the real fault line is the private credit funding the AI buildout, not the bond market.In this episode:Oil up around 12% last week, landing on an economy at 4.1% unemployment and 106,000 average monthly job growthTreasury's buyback boost landing at 3.6 billion spent against 10.5 billion of bonds on offerThe 30 year yield through 5% for the first time in years, the 10 year testing a level not held since 2007An 87% priced chance of a hike this week, and what happens to the other 75 basis points priced in after thatTerm premium on the 10 year at 90 basis points, up from minus 50 in the 2020 bubbleWhy long dated TIPS look like the better trade than nominal Treasuries right nowEvery major bond deal funding the AI buildout, an 80 billion Google raise included, still trading underwaterJonny has spent 25 years trading macro at the highest institutional level. This is not retail speculation or headline chasing. It is rigorous, independent analysis from someone who has sat at the table.New to SuperMacro?Get 30 days of our Daily Note entirely free at www.super-macro.com0:00 Intro: this week's G7 bond sell-off and rate repricing0:58 No Elvis this week, and introducing guest Andy Constan1:55 The three forces behind the sell-off: fiscal, inflation, and hyperscaler issuance4:46 Oil up 12%, landing on an economy already at full capacity6:18 The CPI print, and why PCE inflation isn't getting to target this year7:24 Treasury's underwhelming buyback announcement9:11 Inside the first buyback operation: 10.5 billion offered, 3.6 billion spent10:32 The ECB's hawkish meeting, and why the Fed can't afford to lag behind11:58 The 10 year touching 5% for the first time since 200712:23 The 30 year through its cap, and how high it could still go13:58 How much hiking is priced into the UK, eurozone and US16:13 Why current yields aren't as extreme as they look against nominal GDP growth19:04 Andy Constan: why the Fed has boxed itself into a corner23:24 How much of the global hiking cycle is already priced in25:14 Why the dot plot probably won't match what's priced into the curve27:25 What actually moves the long end: growth and inflation expectations, not supply28:20 Term premium then and now, and the case for long dated TIPS30:23 Treasury's buybacks, the November refunding deadline, and Bessent's Yellen U-turn37:06 The hedge: foreign stocks, gold, and a short dollar38:10 Why equity valuations hinge on earnings expectations that may not hold42:51 Every major AI-linked bond deal still trading underwater Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

There is a generation of bond traders who have never seen yields this high, levels they would have dreamt of five years ago. The US deficit is running at 5.5 to 6% of GDP with the economy nowhere near a recession, and there is no political will in sight to fix it. That combination alone isn't the buy signal it looks like.Two live risks sit in front of this call. Wednesday brings the Treasury's buyback announcement, and Bessent has already said he will at least double the size, with room to go further. Friday brings the CPI print that Fed chair Kevin Warsh has effectively staked his credibility on, after reversing from downplaying inflation in July to calling the 2% target non negotiable at Jackson Hole.Elvis sits down with veteran macro trader Jonny Matthews, 25 years of institutional experience at Brevan Howard and Citigroup, to unpack why he isn't rushing to buy bonds despite the highest yields in a generation, what August's payrolls really mean for the Fed, and why Japan's own hawkish pivot is a warning against betting on long yields falling.In this episode:Why elevated yields reflect strength as much as strain, and the three forces, inflation, fiscal discipline and corporate supply, keeping them thereThe US deficit at 5.5 to 6% of GDP, with next to no political will to close itNominal GDP running near 8%, and why Treasury yields still have catching up to doAugust's payrolls: a 106,000 six month average against the 30,000 to 35,000 needed just to hold unemployment steadyWhy the case for rent disinflation may already be stalling, against Fed governor Waller's dovish readPCE inflation above target for 64 straight months, with services alone contributing 2.5 percentage pointsWhy the Fed's September decision now hinges almost entirely on Friday's CPI printWhat Japan's hawkish pivot did to its yield curve, and why it's a warning against being short long bondsJonny has spent 25 years trading macro at the highest institutional level. This is not retail speculation or headline chasing. It is rigorous, independent analysis from someone who has sat at the table.New to SuperMacro?Get 30 days of our Daily Note entirely free at www.super-macro.com0:00 Intro: do we buy bonds0:51 The framing question, and why high yields alone don't mean buy1:19 The three forces keeping yields elevated: inflation, fiscal discipline, corporate supply2:50 Why higher yields reflect strength, not a debt doom loop3:17 The deficit and debt to GDP since Clinton, the GFC and the pandemic4:19 The 5.5 to 6% deficit, and why there's no political will to close it4:54 Nominal GDP against the ten year yield, and the catching up still to do6:32 Interest costs creeping from 3.5% to 4.5% of GDP8:02 Entitlement spending, and Europe's worse position9:44 This week's risks: Wednesday's buyback announcement and Friday's CPI11:17 The yen, the BOJ's hawkish pivot, and Bessent's swap facility theory13:12 Nonfarm payrolls: the call that played out, and cyclical versus non-cyclical jobs15:08 The 106,000 six month average, and what it means for unemployment17:31 PCE inflation, Warsh's reversal since Jackson Hole, and 64 months above target20:31 Break even inflation at 2.4%, and the Fed's single data point trap22:10 Waller's dovish dissent, and why rent disinflation may already be stalling24:04 What Japan's yield curve just did, and why it's a warning on short bonds26:01 Wrap up: still cautious, and the trade into September Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

US interest costs have quietly climbed to around 18% of tax revenues, up from about 5% not long ago. At Jackson Hole, Fed chair Kevin Warsh delivered what looked like a near 180 degree hawkish pivot from his July meeting, sending the two year yield up 11 basis points in a day. The long end barely moved. Jonny thinks the pivot has less to do with inflation than pressure from the Treasury. Scott Bessent has been doubling bond buybacks and hinting at drawing on the $950 billion TGA to support long dated debt, and the two men meet weekly. A short end hike buys Bessent room to defend the long end without spending the Treasury's own firepower. Elvis sits down with veteran macro trader Jonny Matthews, 25 years of institutional experience at Brevan Howard and Citigroup, to unpack why the long end didn't budge despite the hawkish pivot, what a September hike really says about debt sustainability, and why he still likes gold and short bonds as the trade. In this episode: Warsh's near 180 degree reversal, from downplaying inflation in July to calling 2% a "firm fixed target" at Jackson Hole The two year yield jumping 11 basis points on the day, while the long end stayed exactly where it was Fed funds futures pricing close to 90% odds of a September hike, up from around 60% before the speech Why Jonny expects Friday's payrolls to beat the 55,000 consensus, after a seasonal 50,000 drop in government jobs last month The 30 year Treasury yield at 5.25%, driven mostly by rising real yields rather than inflation Break even inflation at 2.4%, up from a well anchored 2%, a sign of fiscal risk over price risk Why shifting issuance to the short end risks repeating what happened in Turkey's bond market Interest costs near 18% of tax revenues, and why debt sustainability is now a G7 wide problem, not just a US one Jonny has spent 25 years trading macro at the highest institutional level. This is not retail speculation or headline chasing. It is rigorous, independent analysis from someone who has sat at the table. New to SuperMacro? Get 30 days of our Daily Note entirely free at www.super-macro.com 0:00 Intro: did Warsh just kill the debasement trade 0:50 Warsh's hawkish pivot at Jackson Hole, and the 180 from July 1:53 Bessent's TGA hint, the doubled buybacks, and mixed signals from the Fed 3:17 The political trade off: a short end hike to save the long end 3:54 Line by line: what changed between July and Jackson Hole 6:04 Why short term rates are a blunter tool than they used to be 7:18 The labour market case: stable claims and the high frequency data 9:19 Why Jonny expects Friday's payrolls to beat the 55,000 consensus 11:12 The committee split, and fed funds futures pricing near 90% odds of a hike 13:36 December's dot dispersion, and whether it's one hike or two 14:24 Can the economy handle a 50 basis point hike 16:17 Why hiking still won't bring the long end down 17:01 The real driver of long yields: debt sustainability, not inflation 18:11 Break even inflation at 2.4%, and the purchasing power problem 21:27 Shifting issuance to the short end, and what happened when Turkey tried it 23:44 The chart showing fed funds and the 10 year yield decoupling 24:40 Borrower or lender: the devaluation bet, and the trade Jonny holds 28:14 Wrap up: interest costs at 18% of tax revenues, and the G7 wide problem Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The US national debt passed $40 trillion last week. Scott Bessent's response was to double the Treasury's bond buybacks, from $2 billion a time to $4 billion. Against $5.6 trillion of debt maturing in the 10 to 30 year bucket alone, that is roughly $100 billion a year, a fraction of what is actually coming due. Elsewhere, Bessent has sold euros to buy yen to stop Japan selling Treasuries, tapped the TGA to help fund the buybacks, and signalled in the August refunding statement that future issuance will lean towards bills rather than long bonds. Each move buys time. None of them fixes the underlying arithmetic. Elvis sits down with veteran macro trader Jonny Matthews, 25 years of institutional experience at Brevan Howard and Citigroup, to unpack why Bessent's interventions are too small to move the market, what shifting issuance to the short end actually risks, and why he still expects yields to go higher. In this episode: The $40 trillion debt milestone, and why Bessent's "publicly traded" caveat is disingenuous Treasury buybacks doubling to $4 billion a time, still a drop in the ocean against $5.6 trillion maturing in the 10 to 30 year bucket The TGA explained: the Treasury's checking account at the Fed, currently around $1 trillion Why the yen intervention and swap facility increase is not QE, whatever it looks like The August refunding statement's hint that long bond issuance is capped, with funding shifting to the short end Fiscal dominance, and how short dated debt makes the Treasury hostage to the Fed's rate decisions Mandatory spending rising from 14.2% to 15.5% of GDP by 2036, with interest expense following from 3.3% to 4.6% The 30 year Treasury yield at 5.24%, and why the Volcker disinflation shows yields can stay high long after inflation falls Jonny has spent 25 years trading macro at the highest institutional level. This is not retail speculation or headline chasing. It is rigorous, independent analysis from someone who has sat at the table. New to SuperMacro? Get 30 days of our Daily Note entirely free at www.super-macro.com 0:00 Intro: last week's Treasury sell-off and the $40 trillion debt milestone 1:23 Bessent's response, and why it's more smoke and mirrors 2:36 Clip: Bessent on the $40 trillion mark, and why "publicly traded" debt is misleading 5:11 US debt to GDP against Italy and Japan 6:27 Mandatory spending and interest costs rising to 2036 7:42 The yen intervention and the swap facility 8:13 Treasury buybacks: $4 billion a time against $5.6 trillion maturing 10:12 The TGA explained 12:31 Shifting issuance to the short end, and the refunding statement's hidden signal 14:17 Where this goes wrong: debt monetisation and fiscal dominance 16:16 Yield curve control despite a strong economy 18:32 Other levers: bank regulation, the GSEs, and shrinking foreign demand 20:20 Is the dollar's reserve status in question 21:36 A crowded field: global sovereign yields at multi-year highs 23:14 Midterms, entitlement reform, and the UK's Liz Truss playbook 24:50 30 year yields against CPI since Volcker 26:49 Can the US afford to stay in Iran, or walk away 29:02 Wrap up and where to find the Daily Note Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.