Treasury Bond Manipulation Is Failing Already. What’s Next?

Also, we have a severe clash between fed policy and Treasury bond manipulations. Increased Manipulation Announcement Please note Treasury Announces Increased Sizes of Nominal Long-End Liquidity Support Buybacks Beginning September 9 The U.S. Department of the Treasury is increasing, by at least double, the size of liquidity support buyback operations for longer-dated nominal coupon securities (the 10-year to 20-year sector and the 20-year to 30-year sector). The current maximum size of $2 billion per operation will be at least $4 billion per operation. This change is effective September 9, 2026 and will be in effect for the remainder of this refunding quarter (through November 4, 2026). Treasury will provide more information about future buyback sizes at the next Quarterly Refunding, scheduled for November 4, 2026. The announcement was yesterday. Today, the bond market laughed. Bear in mind, this is a trivial amount. It was the announcement that mattered, but only for a day, Bessent = Yellen Not the Fed, Not QE Operation Twist Bloomberg reports Bessent’s Treasury Twist Clouds Warsh’s Plea to ‘Play the Ball’ Treasury Secretary Scott Bessent’s intervention to bring down long-term borrowing costs is another complication for the Federal Reserve as it grapples with whether to raise interest rates. New Fed Chairman Kevin Warsh has urged investors to take their lead from economic data and not rate projections from the central bank. That would give the Fed a clearer signal on how markets are reading the economy. But Fed watchers say the Treasury’s intervention could confuse the signal that markets send. “Market participants are learning to play the ball, not the referee — and market prices will continue to respond in the direction and magnitude they see fit,” Warsh said in his July press conference after Fed officials held interest rates steady. Bessent’s move to boost buybacks of longer-dated debt complicates that approach. Yields on 30-year Treasuries initially slumped on news of the buyback program. “This certainly isn’t consistent with Warsh’s idea that markets need to play the ball,” said Stephanie Roth, chief economist at Wolfe Research. “In theory it clouds the signal we’re getting from markets, which supposedly the Fed is now taking even more signal from.” Bessent pushed back on views that the intervention will impact whether or not the Fed decides to raise interest rates. “That has nothing to do with the decision that I announced this week on the buybacks,” Bessent said in an interview on CNBC. “Part of it is signaling here, and to show that we believe that the yields don’t reflect the underlying fundamentals.” “I do not think the Treasury intervention to jack up the size of bond buybacks complicates the Fed’s rate outlook,” said Nationwide Chief Economist Kathy Bostjancic. “But certainly it is ironic that Fed Chairman Warsh emphasized how much he values ‘unfiltered’ feedback from the markets.” Ultimately, Bessent’s move will dilute Warsh’s guidance that markets can form their own views on the economy and monetary policy without any hints from the Fed, Krishna Guha, vice chairman of Evercore ISI, said in a note. “It is hard to make that case when investors see Bessent as trying to manage the long end,” Guha wrote. Let’s Twist Again The Donald Trump Debt Clock Let’s Discuss the Fundamentals “We believe that the yields don’t reflect the underlying fundamentals,” said Bessent. I totally agree, but in the opposite sense. Please note US Debt Tops $40 Trillion, the Pace Is What’s Most Alarming Debt topped $40 trillion today. But let’s discuss what really matters. Bond Market Manipulation Today, in an attempt to calm the bond market, the treasury secretary started manipulating rates with bond purchases. Since nothing is fixed by this manipulation, it cannot work. To understand why diesel is rising much faster than the price of gasoline, please see US Diesel Crack Surpasses $100 a Barrel for the First Time, Farmers Suffer Record high crack spreads. Serious economic ramifications. The short answer is there is a shortage of global refining capacity. Bond manipulation sure will not fix that. Nor will bond manipulation fix out of control spending by Congress. The Fed is not in a good spot and Fed policy is at odds with Treasury policy. The next Fed meeting is going to be a real hoot. From Peter Schiff on X: “Secretary of the Treasury Scott Bessent said the free market is mispricing long-term bond yields. So he wants to use the superior judgment and power of central government planners to correct the mistakes of capitalism. Good thing we didn’t elect a Democratic Socialist president.” […] August 20, 2026: Treasury Bond Manipulation Is Failing Already. What’s Next? […] what was the type of government that was constantly interfering with the markets and taking ownership in companies and deciding corporate policies, while conditions deteriorated to the point where the government had to bring in food? Could it have been “socialism”??? ….for the next 90 days, the United States will allow up to 300,000 metric tons of product for ground beef to be imported with no out of quota tariff. We have a commitment that this beef will be sold at 25 percent below current market prices… Enquiring minds wonder.. ..who could make the “commitment” to Trump to sell 300,000 metric tons of ground beef at 25% below current prices?? ..are there 300,000 metric tons of ground beef sitting out there in freezers waiting to be shipped to the US?? ..this will help the farmers, too–right?? Beef tacos, anyone?? I saw on FB Reels it’s lab grown meat from a lab in a place called Wuhan? Sounds sort of fishy. Trump tampers heavily with fair systems, then tosses favors to groups with his “brand” (and expectations) stamped on them. He misrepresents that value comes from him. You’ve got half of it! Now, what do you call a government that is nationalist AND socialist? I’ll give you a hint: four letters, little mustache. Gold – and the miners – just perform better the longer you hold them…and this is the central reason why. Saved my financial skin 20 years now I started buying gold in 1999 when it was $275/oz and people were asking “How is the Fed going to administer monetary policy when the entire national debt has been paid off?” I knew that would never happen. I get no one has a crystal ball but I wonder what the endgame is. Bond investors have completely lost confidence in Team Pedo – so is this a massive economic collapse like Japan? Hyperinflation like Argentina or Russia? It’s amazing we spent 40 trillion dollars and all we got were tax cuts to a bunch of greedy sociopaths. Who cares it’s friday and the DOW is green. Everything is fine. Spend all your money this weekend at walmart. And data centers, owned by sociopaths who think that 1984 and Fahrenheit 451 were “how to” manuals. Is that why they’re buying old books and destroying them? One reason. Hyperinflation like Weimar Germany to be followed by a collapse of American democracy? My expectation is hyper-deflation, where they foreclose on everything and you “Own nothing”. argentina has been our path for decades. study how argentina got to where they got. they just keep swapping right wingers with left wingers, but they all just fleece the treasury………..miliei is a real great con man. he got the USA to bail him out recently. he’s moving to my old hood in brooklyn when he’s done. he’s joined the hasidic cult of the lubavitch. he’s a real fucking nut job con man zionist. What the attempt to control the long end debt market and its failure tell me is the direction the government and the fed are going to take in the coming debt issues and that they will not prevail over market forces. First, government is signaling it will try to control interest rates to control the debt market and by extension the other equity markets to keep the bubble inflated. A collapsing market and economy would not be good for Trump’s already lousy legacy. Second, the focus does not include maintaining dollar purchasing power, inflation will be the tool to extend and pretend the fake strong economy narrative. Government stepping aside and letting the free market determine interest rates is their best action for the citizens. The real action they should take is cutting spending aggressively such that we have a small surplus to start if they truly want to cut interest rates on a permanent basis. Politically that is not likely. The probable result of the inflationary path will be increasing stock prices not because the underlying company is doing better, but because the measuring to is shrinking; therefore, net wealth may not be preserved. Debt yields will likely not keep owners whole with respect to decreasing purchasing power, and real assets like commodities, energy and precious metals will hold their wealth and possibly outperform. What the inflation prescription for the economy will do is preferentially direct capital from wealth producing ventures to consumption and lowers the hurdle for investing decisions, therefore direct funds to less optimum opportunities. Bottom line is the inflation prescription encourages and assures a lower productivity economy and long-term pain for citizens. Just my thoughts, not advice A moot discussion. The FED tightened again this week. The FED is more concerned with inflation. This is what happens when investors “take the lead from economic data” as Warsh suggested. Surprise, surprise, economic data being a $40T deficit increasing at a rate of $2T a year along with high inflation points to much higher long term interest rates especially with idiots like Bessent and Trump at the helm. So Bessent has shown Trump that he has levers to pull. This will put him under pressure from Trump in the same way Warsh is. However, Trump can sack Bessent but not Warsh. So does Bessent bend over the next few months and start doing the ridiculous or does he resign and save his reputation. He bends over for others…………. 🙂 Might as well ask “will the Pope tell us that the Catholic Church has been getting it all wrong since 1051 at least?” “Treasury Bond Manipulation Is Failing Already. What’s Next?” even moar bond manipulation? I wouldn’t worry about $40 Trilion in debt. Bessent can just put that on his Platinum Card, then do a balance transfer to a Gold Card, then pay that off with a Silver Card, using a check written on his Bronze Card. This finance stuff is too easy. For the American working class, it’s going to be “ass, cash, or grass”. Only the top 1% and Israel ride for free. When I played Monopoly with my cousins, I was annoyed that my cousin, the owner of the game, always won. As the owner, she claimed the privilege of being the banker. It took me years to figure out why she always won: she mixed the funds of the bank with hers. Indeed, an exorbitant privilege. She learned that from Woody Boyd, that was a Cheers episode I fear another 911 could conveniently redirect a lot of political heat. For most of my adult life there were always discussions about the debt, deficits, social security, medicare, and during that time, nothing was done to fix anything. We are now approaching terminal point. Debt so insurmountable that it becomes a black hole sucking all light (and money) and never letting it escape. I have 2030-2032 down as the date for the mega meltdown but maybe that’s too optimistic. Democrats winning mid-terms won’t fix anything or save anyone. The only positive is the theatrics from Treasury, Trump, and the circus clowns “performing” for the suckers and losers audience (voters). Got popcorn and exit strategy? Need to cut spending some and raises taxes a little, like return to Clinton era tax rates. Entitlement reform needs to be on the table also. And we both know nothing will happen except token measures to make it look like something is being done. Correct because absolutely no one has the stomach for the austerity needed. Not voters and definitely not politicians who would be voted out by those voters if they attempted it. Holmes, entitlements are the least of our worries. Defense and bailouts. Free money for billionaires. Not the chump change we spend on healthcare. I suspect inflation will decide the meltdown date. Once it truly gets out of control like it was in the late 70s things it will be become apparent to everyone what’s happening and it won’t be able to be stopped. I would imagine that inflation will start outside the USA and then come here. As soon as the social security administration has to trim benefit payouts by 22%, it is going to cause a major shock to the economy. It’s going to be a cliff event as currently structured, not a slow transition. All peoples love to have somebody to blame for their failures. It takes heat off domestic politicians too. Trump has supplied that for the world, while polarizing attention to himself. Americans also love a fallen idol story. This all converges sooner or later to Trump being spit out of here like an undigested pork chop. But then we are stuck with our accrued problems, and ourselves. We are still quite tangled up in a way no PR will fix. China could jump in and nudge the failure further along, but so far they haven’t had to lift a finger. The Taoist butcher, says the old story, barely moves is knife, and the carcass falls apart into perfect meat cuts. His blade remains sharp. He knows the subtle mix of action and non-action. The Hurst cycles are running the show, not the Fed, not Bessent. The present 40 day that started on August 4-5 broke the support line formed by the start and end points of the previous 40 day cycle, so a top in the present 40 day cycle is near. August 19 ended the 1st 20 day cycle in the present 40 day cycle. The rise out of the low to start the 2nd 20 day cycle caused Bessent to look foolish. If Bessent had waited another 5-7 days to make his announcement, he would have a better chance of being aligned with the 40, 20, 10 day nest of cycle lows expected around September 10th. Ultimately Bessent will look foolish because the present 20 week cycle looks stronger than the previous one. Fluffer, meet mushroom. I still insist we need a “Laugh” button on Mishtalk! Love the chubby checkers video. Misch, correct me if i am out in left field, as i am only an amateur finance guy trying to navigate this complicated mess of finance. I was thinking that the Feds policy of keeping interest rates low, so that the government can spend more will continue until it couldn’t. Realizing that the market plays such a huge roll, i have been discouraged for some time how it didn’t seem to influence rates, but that when the market had had enough and NEEDED more yield for their investment, they would just refuse to buy lower yields. I had been thinking that once this started, the FED would have a near impossible task to stop it. Kinda like a run away nuclear reaction. It’s not exactly like that. What’s happening is bonds are being repriced. Same mechanism works with gold, houses, etc. It will hit equities at some point. Essentially sector rotation (rotating out of bonds which are not currently in favor to other sectors) correct? Bessent trying to lower yields Unfortunately, this is the only manner in which the current bunch of dc stooges and thieves know how to operate. not on topic but my dad was Navy Air Will his name be on everything?? Exclusive: Navy weighs renaming carrier slated to honor Black war hero, potentially switching it to Trump A shameful name for a shameful new version of America’s military. We don’t deserve ships named after that man who saved others in Pearl Harbor. Not anymore. That’s not surprising given how much Hegseth hates it when black people and women are successful. So as a new name i propose “USS Bone Spurs”. This is not policy this is PR theatre. All Bessent knows is the “buy/sell” hedge fund game. So, he does what he thinks he knows within his very limited span of competence and control. It is interesting that Bessent seems to be disconnected from the Fed. He’s also disconnected from the markets. His intervention to prop up the Yen didn’t do so well either. But again, it served its PR purpose — to distract attention for 24 hours. The problem is, our attention inevitably drifts back to reality. And then he has to figure out another distraction. These guys are clowns doing the bidding of the top clown, Trump. What is Trump’s bidding? “Do Something!” They’ve had us distracted for a decade now. Think they can’t do it for another decade? What Epstien files? They commit crimes faster than the legal system can deal with them, and use the proceeds to hamstring the legal system with horseshit filings. It has been working, and it will continue to work until they burn down the whole shithouse. molester and thief After all the fake and gay manipulations, they could always try actual austerity! (Insert sounds of raucous laughter) They tried that 30 years ago (remember Gramm-Rudman-Hollings?) and decided they didn’t like it. Bessent claims to have breakfast with Warsh weekly, so it’s likely everything is coordinated between the Fed and Treasury. I assume that the recent intervention was just a trial balloon to make sure the market is not surprised by bigger interventions. Everyone in Fed and Treasury is hoping for some kind of crash (bonds or equities) that will justify full scale yield curve control. If oil finally moves that might do the trick. quote: “Bessent’s desire to lower yields (to bring down prices)” is a contradictory statement if one is discussing bonds. To lower yields, one needs to bid up bond prices, for example if bond is selling at $95.23 with maturity to $100 in a year, this nets the acquirer of the bond close to 5% on their money as $95.23 x 1.05 = $99.99. To have the buyer net a lower yield, say 3%, the purchase price of the 1 year bond would be about $100/1.03 = $97.09. Bessent wanted to bid up the bonds to trade at higher price to push the effective interest rate lower. He was not successful. Dollar down, yields up, Hormuz blocked, oil reserves being drained Bessent: “We’ve got a spike in oil prices today that I don’t really understand” This guy isn’t paid enough As someone said in an earlier post, this is a government run by a grand coalition between morons and phonies. I’d like to build on that to say herein lies the issue that always arises when morons and phonies try to work together (usually resulting in fascism). The phonies always think they can control the morons, then one or two months later the morons begin to get out of control. What you are looking at now is what it looks like when the morons get out of control. People who “don’t understand” the concept of oil coming from afar and think they can dictate reality. If Warsh is taking market cues, the bond market ignoring this announcement is probably a good sign that it’s time to send rates up before the ceiling comes crashing down. Stupid is an eternal, mercurial force. It is chaos married inextricably to meat. Trumpstien surfs the stupid, will until he dies, and the stupid explodes in all directions. Some will harness fragments of the Stupid, but it will never be as unified as it is again in our lifetimes. This Stupid’s moment in history, and it’s trying to shine. More laughable than a circle jerk, is a discombobulated circle jerk. Behind the scenes, the diaper nurse is the orchestrator, and has a voiced not unlike Danny Devito. Between changings, it’s up to here to wrangle them. Much of her day goes like this. “Pete! To the inside. The INSIDE. Dammit! PETE! PEEEEEEEETE! NO! The other way! Stop posing for the camera!” Post Of The Day. Never attribute it to stupidity when deception and maliciousness are profitable. Selling short-term treasuries to buy long-term treasuries sounds a bit like kiting credit cards, maybe even a bit like kiting cheques. And the current Treasury Secretary likely has experience with both. Is there any action the US govt can take that would have an effect? None that is politically palatable. That was my thought An effect? GTFO Iran and Israel One form of global manipulation removed from the equation Can’t. Bibi’s got video of Trumpstien doing something vile enough that he doesn’t want it seen. He’s a shameless man… it must be really nasty. tax billionaires