美债市场剧烈波动，财政部与美联储政策协调受疑

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Uh and really a focus on rates too around the globe. We've got a great round table. I Jersey Bloomberg Intelligence chief US interest rate strategist and Sarah Hunt chief market strategist at Alpine Sax and Woods. Both here in studio. Traders are increasingly questioning um what Treasury Secretary's next move will be after what's been I think it's safe to say a bit of a turbulent market uh bond market this past week.

Um Sarah, how do you see it?

I think that it was a surprise that they that he came out and said, "This is what we're going to do in the long end of the curve." I think everyone's been looking at Worsh, Chairman Worsh, and looking at the Fed and seeing what's going to happen with interest rates there. I don't think that people were expecting the Treasury Secretary to come out and and make his own news on this particular front. And I think there are, as you can see, quite a lot of questions about one, how this is actually going to work mechanically.

Two, whether or not this is going to actually help the long end of the curve, which was arguably the idea because you you roundt that already

because it did and didn't.

It did and it didn't. And and and [laughter] on the other hand, gold is just like, okay, we're gone. And it just is going again today. And I think that that's, you know, whether or not the only signal that gold gives is that we don't like anybody else's decisions or it's just a way to play a different angle. I think that you're seeing that that reverse in interest rates didn't reverse gold. So that maybe an anticipation of further movement.

Gold up 5% this week. So yeah, we've seen a big move.

I mean, Ira, where do you stand on this now that this is Friday? It's been a couple days. Yields are still moving up.

Yeah. Well, yields are kind of flattish, right, from the beginning of the week. So yeah, it did a whole lot of nothing. Um, yeah, you know, devil is in the details here a little bit. So, you know, we won't find out the exact size. You know, he says maybe next week that they'll uh tell us more information. Um, I did think it was really funny when Scott Besson said, you know, we're doing this because there's, you know, low liquidity in the middle of summer and things like that, but this doesn't start till September 9th.

Um, so I'm not exactly sure this summer, right?

I guess, but it's not August. It's not now, right? [laughter] And and in fairness, like I was looking at the depth of the market actually right around the time that he said that and actually the depth of the market was not bad, right? The depth of the market was your typical summerish levels, not insanely low. So it's not like they really needed the direct liquidity support here.

That's what I was going to say. Political or did the market need this Sarah?

So I you know it's interesting. I think that people have been concerned globally about rates rising especially on the long end and that's been a problem for investors. It's been a problem for all these companies that are now trying to finance the entire AI build. So, right. So, the question is, are we doing something because this exact amount of money is going to make a change or is the fact that we're saying we're going to do something reminding everyone that the government can come in at any time and change the game?

And I think it's a little bit to me of that. I don't know how you feel about that, Ira, but that was my take was a little bit like we're going to do something and not just stand there and let the market figure it out.

Yeah. I I I think they did this and it was kind of underwhelming, right? It's it's kind of like the Federal Reserve in December of 2007 when they did a you know they did a $40 billion program for a $300 billion problem and you know so something like that. Maybe there will be a little bit more shock and awe. Um but there are risks to what they're doing too, right? Like if they're going to issue a whole lot of tea bills in order to buy back a lot of debt and let's call this what it is. if it's going to work and if the the president and and Treasury Secretary are really serious about getting long end yields down, they have to do this in size and we have to then call this an operation twist similar to what the Treasury Department did in the 1960s.

Um, and if they if they do that, the the one big risk for them is what happens if the Federal Reserve has to raise interest rates because they're going to be issuing T bills which capture that interest rate move almost immediately compared to 30-year debt which, you know, obviously takes 30 years to recapture that new interest rate environment.

Sarah, what do you think it means for the Fed? Does this at all kind of alter when we do get

a move from the Fed? I'm not sure what the answer to that is and I don't know if there's any actual coordination going on that we don't know about. I mean, what we see is what the headlines are. We don't see what everybody's talking about behind the closed doors. So whether or not there is a conversation, I couldn't tell you. One would hope that there might be some sort of coordination or at least an understanding because otherwise then you start to look like you've got government departments fighting one another.

So I'm What's your take on that? Well, I I think that they're not coordinating because if they were coordinating, then the Federal Reserve would not have stopped buying T- bills. The Federal Reserve was doing these reserve management purchases, buying $10 billion of T bills every single month. So, if they were coordinating and Treasury Secretary Bessant said to Kevin Worsh, "Hey, we're going to be issuing more T bills to buy 30-year debt.

How about you buy some of those tea bills?" Well, the Fed's not buying those tea bills. So, if there was coordination, it was pretty poor. Um, is this President Trump potentially too saying, "Hey, Scott Bessant, I need you to do something because my Fed chair isn't doing something." Is it possibly?

I don't I absolutely possible, right? I Because again, I think we're all trying to understand struggling to understand exactly what the point is exact in the timing frames.

So, fast forward. Okay. So, are do we get answers at Jackson Hole this coming week? I mean, we have a Fed chair who has already shown he doesn't like to say a lot or lay out the metrics of what that, you know, what metrics he is following and the Fed is following the FOMC in terms of figuring out monetary policy. Do you think we're going to get anything this week? Well, he's told he's told us he's going to frame the big questions and

you can lay them out, but you don't say what you're following.

Well, and this and this is the the challenge that Kevin Worsh really has had. And I don't think he's done a particularly good job in communicating with the markets because you have to give the markets something, right? You can't give them nothing and he's basically given the markets nothing. So, he has to either say give some kind of forward guidance or say if this happens then we will react this way. So, give a reaction function.

You have to do one of those two things. It's interesting because he put Mvin King, former Bank of England governor, on the communications task force. This is what Mvin King wants to do. He want he says that, hey, we want to give the reaction function. We don't want to give forward guidance.

But Kevin Worsh clearly has if he read that paper, then he