August 19
Mkts 2Y 10Y 30Y
S&P is up 0.25% | 5:28
2Y yield is 4.173%, lower by 1.3bp
30Y yield is 5.195%, lower by 8.9bp
Oil is $86.00, up 1.25%
Gold is up $187
Diesel is up to $5.504 from $5.358 a week ago
Bessent Blinks at 5.3%
To prevent Japanese investors from selling their U.S. Treasury holdings, the U.S. Federal Reserve is offering the FIMA Repo Facility. This allows Japanese investors to lend their U.S. Treasury bonds instead of selling them and receive U.S. Dollars in return. This way, the bonds do not have to be sold on the open market, and market yields would not be driven up as a result. It’s a nice idea, but why would Japanese investors do this—instead of simply cashing out their investments?
Trump’s Long War | Wauck
Watch enlistment and reenlistment rates. The cannon fodder always knows first when the war is lost.
Benjamin Netanyahu goes fully psychotic. Israel will attack any country at any time.
Iran
Trump says Hormuz open as reports point to weaker Iran control
Trump says Iran talks possible 'maybe at some point'
NATO is prepared to address any threat and would take necessary action to defend all its members
News
FOMC Minutes Tilt Hawkish: 'Inflation Risks Skewed To The Upside' Due To AI | Zero
Several officials judged that financial conditions may not have been restrictive enough, while others noted that tighter market conditions were already contributing to the Fed’s efforts to slow demand. A small group of policymakers who supported raising rates at the July meeting believed an immediate hike could have reduced the need for larger increases later.
Officials generally viewed inflation risks as tilted to the upside, although some said financial markets were already doing part of the tightening work. Importantly, the meeting took place before subsequent data showed cooler employment and inflation, meaning the discussion may overstate the degree of tightening currently expected by markets.
Mortgage
This sounds like a big deal, but it's only really a medium deal. It's not QE and it never was.
Treasury has been conducting buyback operations for more than 2 years and the primary purpose is to support LIQUIDITY in the bond market rather than to influence yield levels. Nonetheless, the bond market can't help but experience some impact to yield when these things are announced/changed simply because it affects the composition of buying demand. Specifically, if Treasury is buying illiquid, older securities from sellers who might have otherwise not even tried to sell them. This frees up their balance sheet space to do "other stuff" in the bond market ranging from "buying more short-term Treasury debt" to simply serving as another source of general liquidity at a time where liquidity is a steadily increasing concern.
Moderna Announces New Vaccine to Protect Against Effects of Its Previous Vaccines | Genes
Luxury Tehran property asking prices surpass Munich and Sydney
The Tehran estimate draws on luxury properties in some of the capital's most expensive neighborhoods, while the international figures cover broader city-center apartment markets.
Debt Rattle
Trump Confirms ‘No Talks’ – Says Hormuz ‘Open & Operating’
“State attorneys general have sued the Trump Administration approximately 100 times since January 2025.” State AG’s have public jobs, and are paid with public -taxpayer’s- money. How is it part of their job description to harass the President?
Simpl
Ukraine’s Economy Braces for Disaster as Zelensky Faces New Political Challenge
The Economist piece ends with a warning that continued Russian strikes could cause a mass exodus out of Kiev, admitting that the overriding plan now is simple survival until next spring—which does not sound very promising or comforting:
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