GGMA Markets Briefing: The Bessent Bond Put Fails Its First Test: Yields Back at the Highs, Dollar Sold
The Treasury's intervention lasted about a day. Long-end yields rose again on Thursday even as the Secretary flagged scope for repurchases larger than the four billion dollars planned for next month, and the 30-year sits at 5.25% after sliding nine basis points on Wednesday and jumping six the following session (BBG). Treasuries steadied overnight, but bonds fell in Japan, Australia and New Zealand, and the dollar slipped against every Group-of-Ten peer (BBG).
One market analyst said the expanded buyback plan failed to convince investors it can durably contain long-term borrowing costs (BBG). A strategist at a large American advisory firm put it more directly, arguing the Bessent put will still fail to keep yields down from multi-decade highs and that lowering them over any longer period requires the painful work of bringing the debt down. Bank strategists noted that with the budget set by Congress rather than the Treasury, adjustments around buybacks can have only a small, transient effect. Analysts at three separate firms warned that the surprises themselves raise term premium, the extra compensation investors demand for holding government paper. The Secretary played down the reaction, saying anything that happens within a 24-hour period is noise (BBG).
The St. Louis president Musalem, who does not vote this year, said the move reflects a competition for capital between gross government financing and the artificial-intelligence build-out now being financed in the United States and globally, rather than any doubt about the central bank. Inflation expectations are anchored, and Fed credibility is not in question, he said, while repeating that he would have preferred to raise rates in July and that he sees a greater probability inflation fails to return to the 2% target within eighteen months without higher rates (BBG). Meanwhile, payments on a median-priced home took 34% of a typical family's income in the second quarter, up from 32% in the first, as 30-year mortgage rates climbed near a one-year high of 6.8% (BBG).
Currently, STIR traders price 9 basis points of tightening for the September Fed meeting, a 35% probability of a rate rise, and 23 basis points cumulatively by December. For the ECB, they price 24 basis points for September, a 96% probability, and 46 basis points cumulatively by December. For the BoJ, they price 20 basis points for September, an 82% probability, and 39 basis points cumulatively by December.
In stocks, Asian equities steadied, and the regional gauge rose 0.6%, with US futures pointing to modest gains, the S&P 500 contract up 0.07% at 7,668 and the Nasdaq up 0.20% at 29,358 (BBG). Hong Kong rose 0.75% to 25,887, and the CSI 300 rose 0.67% to 4,610 after Beijing pledged timely fiscal support (Reuters). Tokyo was the exception, the Nikkei down 0.77% to 65,850 against a firmer rates backdrop. Samsung shares climbed about 4% before an expected shareholder-return package that may be worth as much as 110 trillion won (BBG). European shares were set for a tepid start after seven consecutive days of losses, their longest losing streak since September 2023 (BBG).
In Japan, inflation accelerated for a second month and came in exactly on consensus across all three measures, the headline at 1.9% from 1.6%, the central bank's own core gauge at 1.8% from 1.6% and the measure excluding fresh food and energy at 1.9% from 1.7% (LS). Flash surveys strengthened alongside, the composite at 53.4 from 52.7 with manufacturing at 55.1 (LS). The BOJ is priced at 82% for September, and the yen firmed 0.13% to 158.85.
In currencies, the dollar index eased 0.18% to 98.72 as investors baulked at the Treasury's rescue efforts (Reuters). The euro traded at 1.1697 and sterling at 1.3651; the pound was helped by domestic consumer confidence climbing to a two-year high at -14, above expectations of a slip to -18 (LS). The won strengthened 0.81% to 1,383. The Canadian dollar firmed 0.21% to 1.3761 after a trade official described a tariff deal with Washington as very close (WSJ).
In commodities, gold rose 0.70% to 4,548 and is on course for a third weekly gain (Reuters). Brent fell 0.30% to 93.50 and WTI 0.48% to 86.41, snapping a five-day rally, as Chinese refiners kept buying in check with prices above ninety dollars and Iranian barrels bound for China were squeezed by the blockade (BBG). Washington said it would impose the toughest sanctions in its history on Iran (Reuters), with the Treasury Secretary telling CNBC that countries are either with the United States or against it and calling the plan the greatest coordinated economic isolation in history, with details promised at a press conference on Monday. The difficulty is that China remains the principal buyer of Iranian crude, so the measures aim at Beijing as much as at Tehran (BBG). Copper rose 1.17% on the Chinese support pledge.
In corporate news, Broadcom is in talks with lenders to raise more than $ 60 billion in debt for an artificial-intelligence chip financing arrangement benefiting Anthropic and others (BBG). Anthropic expects to match or beat the size of SpaceX's record initial public offering (Thehindubusinessline). Monte dei Paschi is seeking to buy two banks for a combined 34 billion euros to avoid being taken over itself (BBG).
In other news, this article caught my eye: Private credit's next big thing is 1 trillion in British pensions (WSJ). The industry that has already reshaped corporate lending is now targeting the retirement savings of British workers, which is the point at which a wholesale funding story becomes a retail one.
Data and the day ahead: New Zealand swung to a July trade deficit of 1,949 million New Zealand dollars from a revised 237 million shortfall, as imports jumped to 9.34 billion against exports of 7.39 billion (LS). Australia's flash composite eased to 52.5 from 53.2, with services leading the moderation (LS). The Reserve Bank of New Zealand's quarterly business survey showed inflation expectations falling across every horizon, with the one-year and two-year measures both down sharply, which sits awkwardly against a September rise priced at 93%. Still to come: the euro-area flash PMIs from 09:15 CET with France first, Germany at 09:30 and the bloc at 10:00, the UK composite at 10:30 CET, ECB wages at 11:00 CET, Canadian retail sales at 14:30 CET, and the US flash PMIs at 15:45 CET, where manufacturing is seen little changed and services easing slightly. Euro-area consumer confidence follows at 16:00 CET. No central-bank speakers are scheduled for the rest of the session, with the Reserve Bank of Australia governor and the ECB's Sleijpen both speaking overnight.
Time Stamp: 21-08-2026, 07:55 CET