Dear Trader,
Three stories this morning, and they're really all one story.
The Treasury doubled the size of its bond buybacks, the man who ordered it says he can't explain why oil spiked, and bitcoin took the whole thing as an invitation to run.
Mark Sebastian and Tim Colby go live today and they're taking all three apart.
Tim's also been building a dashboard he's kept pretty quiet about, and he starts showing it off next week.
Tap here to join Tim’s Reboot eLetter and get updates on when you can see it for yourself with Tim live.
This link adds State of the Market to your calendar.
The Daily News Breakdown
SIREN: The man in charge of calming the bond market told reporters he doesn't really understand why oil spiked. That's a direct quote from Bessent's Thursday gaggle, one day after he doubled the size of Treasury's buyback operations. He also called anything that happens inside a 24-hour window noise. Crude is sitting above $93 with the Hormuz mess nowhere near resolved, so the confusion landed badly. Fox's Jessica Tarlov said literally everyone else knows. Ted Lieu was less polite about it. I'll take honesty over spin any day, but I'd feel better if the guy running the buyback program had a working theory on the biggest inflation input on the board.
SNEAKER: Reuters opened Friday's note with the Carville line about wanting to come back as the bond market, which tells you how the week went. The 30-year hit roughly 5.34%, highest since 2007, and it wasn't only our problem. Europe and Japan sold off too. Part of the blame goes to nobody knowing what new Fed Chair Kevin Warsh actually thinks about inflation. The rest is arithmetic: $40 trillion in total debt, a $432 billion July deficit, interest costs past a trillion a year. The line worth flagging sits near the bottom. July's minutes read more hawkish than the 6-3 vote implied, several members looked ready to hike, and PCE drops next week.
SIGN: Bitcoin ripped about 18% in 48 hours, and the reason has nothing to do with anything the crypto faithful usually preach. Treasury doubled its long-end buyback operations, from $2 billion a session to $4 billion, and Bessent added that he has a big toolkit if that doesn't do it. Bernstein's Gautam Chhugani says bitcoin has always responded well to liquidity expansion, and this week it got promised plenty. So it's north of $77,600 after spending since late May below $70,000, not because anybody rediscovered the debasement thesis but because the government started bidding for its own paper. Trump hosting Coinbase and Robinhood at the White House didn't hurt either.