The Bond Market Chaos Is Coming for Us All

The Treasury market is the bedrock of the global financial system and sets the cost of money for governments, companies, and households.

The current debt level is not unsustainable, but the trajectory is not sustainable and could become monstrously large.

Bessent's buyback program is a naked attempt to lower yields that ignores the scale of the market and is unlikely to work.

The ultimate intervention is the military, and it will be used if necessary.

Using the military against the bond market is an unprecedented and bizarre escalation.

Yields do not reflect underlying fundamentals and will come down once the Iran conflict is resolved.

The underlying issue is the size of the U.S. indebtedness and the Fed's unwillingness to raise rates to bring inflation down.

Hedge funds are highly leveraged and not strong hands, meaning they can cause rapid sell-offs when the cost of borrowing rises.

The administration's policymaking is incoherent and doing things they know won't work, which damages credibility.

Some unpredictability from the Fed can be healthy because it makes investors less confident about doing risky things.

A classic U.S. debt crisis is unlikely, but unconventional crises like runaway inflation from printing dollars are possible.

AI investment is crowding out demand for Treasuries on the margin, but it is not the main factor driving yields up.