Gregory Bent
CFA, Equity Analyst, US & Canadian Markets, 30+ Years of Experience
The US Treasury's doubled buybacks of long-dated debt should loosen financial conditions, which is bullish for US stocks and long-dated Treasuries. Buybacks rise to at least $4B per operation on 10- to 30-year paper, clearing sticky off-the-run supply from dealer balance sheets and putting a soft cap on long-end yield spikes after 30-year yields hit multi-decade highs. x.comÂ
Long-dated Treasuries are the safe-haven trade again as money rotates into yield. With the 30-year paying over 5%, holding non-yielding assets is harder to justify; after the Fed held, yields fell across the curve and TLT rose 1%. x.comÂ
Falling Treasury yields reinforce the growth-scare thesis and mark a bullish turn for long-dated Treasuries. The 10-year yield is breaking below 5% as TLT rallies. x.comÂ
Treasury buybacks are too small to offset selling pressure on long-dated US Treasuries. Today's buyback of up to $6 billion of 20- to 30-year debt barely moves the needle, and recent buybacks have failed to push yields sustainably lower. The bond-vigilante read is that investors are selling into Treasury's buying to test Secretary Scott Bessent's ability to control the long end. x.comÂ
Long-dated Treasuries look oversold because Treasury Secretary Bessent is likely to intervene soon. Long-end yields reflect term premium from a fiscal problem, not inflation fear, and only the issuer can fix it by shifting supply to bills, sizing up long-dated buybacks and signaling it. Treasury already doubled long-dated buybacks in August. With a trillion-dollar interest bill, policymakers have a pain threshold; the 1942-1951 yield cap is the precedent. @UrbanKaoboy sees a capitulation bottom. … Show more
Long-dated US Treasuries look favorable as the rise in 10-year yields appears mostly over; inflation searches have peaked, and only 13 of 29 tracked commodities are above their 50-day averages. x.com x.com x.comÂ
Long-dated Treasuries are no place to hide, because Treasury's buyback is a minnow against the pile of debt it aims to calm. Kevin Warsh will hike anyway, as he said at Jackson Hole, even though a rate hike cannot produce a barrel of crude or reopen a strait, and the bond market is daring him to prove it. Occidental, at about 8.4x trailing earnings with an 8.7% free cash flow yield during an oil shock, looks far better. x.com x.comÂ
Long-dated Treasuries could benefit from less issuance of AI-related debt, which today's news may point to, even if the deal itself is minor. Separately, a free Meta Muse hurts the leading AI models at least at the fringe, and wide consumer adoption of AI agents will come when Apple launches its own or partners with a model maker. x.comÂ
Long-dated US Treasuries show textbook capitulation, suggesting the 10-year yield is near a temporary top. Long bonds have closed below the lower Bollinger band for five straight days on rising volume, with implied-volatility rank at an extreme, a sign of extremely crowded shorts. High rates do little to restrain highly profitable companies such as big tech and semiconductors. x.comÂ
Inflation has broken long-dated US Treasuries' safe-haven role. Long-term Treasuries have returned -4.1% annually in the 2020s to date, versus +4.9% in the 1930s. Long bonds look unlikely to do well for at least the rest of this decade. x.com x.com x.com x.comÂ
Long-dated US Treasuries look worth a small long: recent market action testing Treasuries is likely wrong, and the 20-30 year part of the curve is what the Fed can most easily push around. The Fed may raise rates but would not do QT. A long 30-year position also trims some overall oil beta. x.com x.comÂ
