Coincamps

Translation: Peggy
Editor's Note: On August 19, the U.S. Treasury announced an expansion of long-term Treasury liquidity support repurchase agreements, increasing the single round of repurchase for 10-20 year and 20-30 year nominal coupon Treasuries from a maximum of $20 billion to at least $40 billion. The new arrangement will be effective from September 9. Before the announcement, the 30-year Treasury yield briefly rose to around 5.34%, hitting a post-2007 high; after the announcement, the long-end yield retraced momentarily.
$40 billion is not significant compared to the over $30 trillion U.S. Treasury market, and the repurchase itself does not equate to quantitative easing. What really sparked market discussion is the timing of the announcement: the Treasury had just concluded the quarterly refunding announcement two weeks ago but suddenly increased the size of long-term bond repurchase outside the regular window. This led investors to reassess how willing the Treasury is to actively intervene in the market as long-term yields spike.
The Heisenberg Report cited Nomura Securities' Cross-Asset Strategist Charlie McElligott and Rabobank's Strategist Michael Every's assessment, interpreting this move as a policy signal: the U.S. government may not be willing to let long-term funding costs keep rising, thereby constraining fiscal spending, geopolitical strategy, and private sector financing. This led the market to create the 'Bessent Put,' referring to the 'Bessent Floor Expectation.'
However, there is still a long way to go from expanding repurchases to yield curve control or even restarting quantitative easing. This article is not really discussing whether 'QE is back,' but whether the U.S. policy reaction function is changing: if fiscal pressures, inflation, AI financing, and geopolitical conflicts continue to drive up long-term rates, will the Treasury and the Fed be forced to take stronger actions?
Below is the translation of the original article:
After the U.S. Treasury expanded long-term Treasury repurchases, the market's initial questions were not about the scale but two more direct questions: why now? Does this imply that the U.S. government is starting to set an implicit floor for long-term yields?
Some investors have already dubbed this arrangement the 'Bessent Put,' or the 'Bessent Floor Expectation'; others have called it a 'lite QE' or a new round of 'Twist Operation.' These names are not formal policy concepts but market speculations on the Treasury's policy intentions.
On August 19, the U.S. Department of the Treasury announced that it would increase the liquidity support repurchase size for 10–20-year and 20–30-year Treasury Inflation-Protected Securities (TIPS) from a maximum of $20 billion to at least $40 billion. The official reason given by the Treasury was that the long-term bond repurchase continued to receive a large number of high-quality bids, and therefore, they aimed to provide stronger liquidity support for these tenors.
This explanation did not completely dispel market doubts. A single $40 billion repurchase remains limited, but just before the announcement, long-dated U.S. Treasuries had just experienced a rapid sell-off, with the 30-year yield briefly spiking to around 5.34%. Therefore, investors were more concerned not with how much the Treasury actually bought but with what signal it chose to send at this point in time.
$40 Billion Is Not Large, Unexpected Announcement Itself Is More Important
Nomura Securities' cross-asset strategist Charlie McElligott believes that the specific size of the repurchase is not the key issue. More importantly, Powell seems to be telling the market that the U.S. government cannot accept continued disarray in the long-term Treasury market, and fiscal and monetary authorities may take a more proactive stance than before.
This is an analyst's interpretation of policy intent, not a confirmed yield level target by the Treasury. Officially, the Treasury still defines this adjustment as "liquidity support" and has not announced any yield level they are aiming to support.
However, the timing of the announcement reinforces market speculation. The U.S. Treasury usually communicates funding and debt management arrangements through the Quarterly Refunding Announcement (QRA). This adjustment came just about two weeks after the last QRA, outside of the regular communication window.
According to McElligott, this unconventional timing indicates that the speed of the rise in pressure on the long end of the bond market may have exceeded the policy sector's previous expectations. Consequently, the market interpreted the announcement as a "signaling operation": the Treasury aims to prevent further deterioration of liquidity from amplifying the rise in long-term rates, rather than just routine optimization of the bond structure.
This assessment still needs to be cautious. The subsequent decline in yields after the announcement only indicates that the market reacted immediately to the news, not that the Treasury has successfully lowered long-term funding costs. In fact, the subsequent pressure on long-dated yields also indicates that small-scale repurchases may not be enough to offset deeper factors such as fiscal deficits, inflation, and bond supply.
Long Bond Pressure Does Not Originate From a Single Variable
The article believes that the repurchase behind this is not a single liquidity issue, but that multiple adverse factors are simultaneously squeezing long bond demand.
First is the continued expansion of the US fiscal deficit and debt supply. When investors hold long-term bonds, they usually require an additional return to compensate for inflation, fiscal, and interest rate volatility risks. This part of the return is known as the term premium. The original text's referenced chart shows that the estimated 10-year US Treasury term premium has approached nearly 80 basis points, about twice the peak of the 2023 sell-off in long-end bonds.
Secondly, AI infrastructure development is bringing a large amount of corporate bond financing. Tech companies and data center operators need to raise funds for chip, power, and computing facilities. The increase in corporate credit bond supply will compete with US Treasuries for private sector balance sheets. McElligott summarizes this as a "crowding-out effect": when both government and corporate bonds are issued in large quantities, there is a limit to the long duration risk the market can absorb.
Japanese factors have also added to the uncertainty. Japan is a significant overseas holder of US Treasuries. The depreciation of the yen and its potential intervention needs make the market concerned that Japanese institutions may sell off some US Treasuries to raise dollars. The article links the recent US engagement in the foreign exchange market with the Treasury's expansion of long bond buybacks, suggesting that policymakers may want to avoid reinforcing exchange rate intervention and US Treasury sell-offs.
However, this is still a market interpretation. Public information can confirm that the US Treasury has expanded long-term bond buybacks, and pressure on long bonds, the yen, and corporate financing can be observed. Still, the Treasury has not provided a full explanation of whether these factors directly constitute the reason for this policy adjustment.
「Bessent Put」 Points to a New Policy Reaction Function
What the market is truly repricing is the US government's policy reaction function.
The so-called policy reaction function refers to investors' judgment of what actions policymakers may take under what conditions based on their past behavior. If the market believes that after long-term rates rise to a certain level, the Treasury will increase buybacks, adjust issuance maturities, or enhance coordination with the Fed, investors may begin to factor in this potential intervention into bond prices in advance.
The "Bessent Put" is precisely the market expression of this expectation. It is not an official policy, nor is it a Treasury commitment to support US bond prices. It refers to investors starting to speculate: when long-term yields threaten government financing, economic activity, or other policy objectives, Bessent might take more proactive debt management measures.
Michael Every further explains from a geopolitical strategic perspective that what the US government may focus on is not just "lowering yields" but avoiding long-term funding costs limiting its foreign policy, especially against the backdrop of ongoing tensions with Iran and rising energy supply risks.
Every believes that in the past, the United States could conduct external actions by controlling financing conditions and key supply chain support. However, the current situation is more complex. The United States does not fully control the energy and related physical supply chain, and even though some crude oil can still be transported through the Strait of Hormuz, finished oil supply may not be able to recover concurrently.
McElligott also raised similar risks: if the Gulf situation escalates again, the impact could spread globally through finished oil, manufacturing, and inflation. Crude oil inventories can be released, but refining capacity and finished oil supply cannot be quickly replenished simply by releasing inventories.
This means that policymakers may face two opposite pressures at the same time: geopolitical conflicts pushing up energy prices and inflation, requiring interest rates to remain relatively high; fiscal financing and economic pressure, yet demanding long-term rates not rise indefinitely. Expanding repurchases may alleviate market liquidity, but it cannot eliminate this policy contradiction.
Repurchase Is Not QE, Further Impact Is Needed for Yield Curve Control
Does expanding government bond repurchases mean that the United States has returned to the path of quantitative easing? The original text suggests that this may open up such a discussion, but it is still too early to draw conclusions.
The Treasury's repurchase is fundamentally different from the Fed's quantitative easing. Treasury repurchases are mainly debt management operations, buying back old securities with poor liquidity, coordinating with the issuance of other maturity bonds to improve market operations or adjust debt structure; while QE involves the Federal Reserve's large-scale purchase of assets and injecting reserves into the banking system, directly expanding the central bank's balance sheet.
Therefore, liquidity repurchases at the $40 billion level cannot directly be called QE, nor are they sufficient to prove that the Treasury is implementing formal yield curve suppression.
McElligott believes that this announcement is more like an "intention statement," prompting further market discussion on the possibility of YCC or QE. YCC refers to yield curve control, where the central bank commits to buying bonds to limit specific maturity yields near the target level; LSAP refers to large-scale asset purchases, which is also a primary form of quantitative easing implementation.
However, he also emphasizes that before these tools become the next policy choice, the market and economic environment must "deteriorate much further." In other words, the "Powell Put" currently changes investors' imagination about the policy boundary, rather than indicating that the United States has launched a new round of QE.
What needs to be observed next is not only whether the Treasury continues to expand the size of single repurchases, but also whether long-term yields can stabilize, term premiums fall back, the Treasury further shortens debt issuance duration, and whether the Fed will adjust its balance sheet policy accordingly.
If these measures continue to escalate, the market's perception of "Treasury backstop" and policy coordination will be strengthened; if long-term rates continue to rise under structural pressure, and the Treasury still limits repurchases to small-scale liquidity operations, then this announcement is more likely just an attempt to stabilize the market in the short term rather than the starting point for QE.
[Original Article]

On August 17, Xiami is back.
Alibaba has released the AI music model HappyShrimp 1.0, Chinese name "快乐虾米" (Happy Xiami). Users only need to write a sentence, and it can generate a complete song.
You don't even need to know what chords, time signature, or key it is in. You can tell it you want to write a song for your recent graduation, best suited for playing in a coffee shop; or you can say, it's almost time to get off work, suddenly raining outside the window, feeling a bit melancholic, but not too heavy. Words that used to describe feelings can now be turned into music commands. HappyShrimp will try to understand and then create accordingly.

TL;DR
Bernstein used South Korea's export data as an indicator of HBM revenue, estimating Samsung's third-quarter HBM revenue to reach $12 billion, about 30% higher than its original forecast.
In July, Samsung's related region's exports increased by 122% compared to April, with unit prices doubling, indicating that the growth may be primarily driven by the high-price HBM4 volume.
SK Hynix's related exports declined by about 27% compared to April, and the baseline regression model indicates a 20% quarterly decline in HBM revenue for the third quarter. However, single-month data and seasonal differences introduce significant uncertainty into the results.
Bernstein attributes SK Hynix's weakness to delayed shipments of HBM4 related to Rubin, but this is still an analyst's speculation and not a confirmed causal relationship by NVIDIA or SK Hynix.
HBM prices have not skyrocketed in sync with traditional DRAM prices. Samsung's increase in unit value reflects more of a product mix shift to HBM4 rather than a significant price hike for similar-spec products.
Bernstein remains optimistic about Samsung, SK Hynix, and Micron, believing that the next round of earnings revisions is more likely to come from the 2027 HBM contract prices rather than relying solely on this year's market share changes.
South Korea's July memory export data provided the first set of leading signals for Samsung and SK Hynix's third-quarter HBM business.
Bernstein has long been tracking South Korea's multi-chip memory exports to China, Taiwan, and Malaysia. The report suggests that these exports have a strong correlation with Samsung and SK Hynix's quarterly HBM revenue: Taiwan is a key location for CoWoS advanced packaging, and Malaysia has Intel's EMIB packaging facilities.
In July, South Korea's multi-chip memory exports to China, Taiwan, and Malaysia declined by 32% from the previous historic high in June. However, the report attributes this change mainly to intra-quarter seasonality. Compared to the first month of the previous quarter in April, July exports still increased by 13%, with a year-on-year increase of 64%, indicating that overall HBM demand has not significantly weakened.
While maintaining strong overall volume, the export trends of the two South Korean memory manufacturers have diverged: Samsung's related exports continue to rise, while SK Hynix's related data are significantly below Bernstein's expectations.
Samsung's Third-Quarter HBM Revenue May Exceed Expectations by 30%
Bernstein used Chungcheongnam-do's exports as a proxy indicator for Samsung's HBM shipments, as Samsung's related backend production and packaging facilities are mainly located in that region.
In July, Chungcheongnam-do's exports of multi-chip memory to China, Taiwan, and Malaysia reached $2.2 billion. Despite a 35% decline from the seasonal peak in June, this amount represented a 122% growth from April. Samsung's related exports have also exceeded SK Hynix's for two consecutive months.
According to the regression analysis based on historical export data and HBM revenue, Bernstein estimates that Samsung's HBM revenue in the third quarter could reach around $12 billion, representing a sequential increase of about 80% and exceeding its original forecast of around $9.3 billion by about 30%.
If only recent data since the first quarter of 2025 is used for regression, the forecast value would further rise to $12.6 billion, corresponding to a sequential growth of about 90%.
South Korea's monthly export value of multi-chip memory to China, Taiwan, and Malaysia (in billion dollars) and year-on-year growth rate. Although the July export value declined sequentially due to seasonal factors, it still increased by 64% year-on-year, indicating that the overall HBM demand remains robust.
However, this number is still a model estimate and not company guidance. Samsung's exports usually concentrate in the last two months of the quarter, with the first month of the quarter averaging less than 20% of the total quarter's exports since 2025. Therefore, whether the third-quarter revenue can ultimately reach the model's forecast will depend on the actual shipments in August and September.
Bernstein believes that the July data is at least consistent with Samsung's previous direction: the company expects third-quarter HBM4 sales to more than triple sequentially and account for over 60% of HBM sales in the second half of 2026.
Doubling Unit Value, HBM4 Becomes Samsung's Growth Driver
In addition to the export volume, the export unit value of Samsung's related products has also significantly increased.
Export value of multi-chip memory from Chungcheongnam-do (Samsung's HBM packaging location) to China, Taiwan, and Malaysia (in million dollars) compared to Samsung's quarterly HBM revenue (average per quarter). The July export value reached $2.2 billion, a 122% increase from April, marking the second consecutive month higher than SK Hynix. Right Chart: Based on historical data regression analysis, the July export data suggests that Samsung's third-quarter 2026 HBM revenue could reach $12 billion, with a sequential growth of about 80%, exceeding Bernstein's original forecast by about 30%.
In July, the export unit value of multi-chip memory from Chungcheongnam-do increased by another 21% sequentially, more than doubling from the April level and approaching four times that of SK Hynix's related region. Due to the higher capacity, stacking layers, and technical complexity of HBM4, Bernstein believes that this change likely reflects a rapid increase in Samsung's HBM4 shipment share.
This does not mean that Samsung has doubled the price of HBM with the same specifications within a few months. The unit export price will also be affected by product structure, capacity specifications, and packaging combination, and can only serve as a directional indicator of the average selling price. A more reasonable explanation is that Samsung is replacing some HBM3 and HBM3E with a higher-priced HBM4, thereby increasing the overall export value.
This is also a key opportunity for Samsung to regain market share. Previously, SK Hynix took the lead with HBM3E and a closer supply relationship with NVIDIA; as we enter the HBM4 cycle, the competition is shifting towards who can complete validation earlier, improve yield rates, and achieve scale delivery.
SK Hynix’s Export Performance Weakens, But Monthly Data Does Not Directly Equate to Market Share Reversal
In contrast to Samsung, SK Hynix's related exports notably weakened in July.
Bernstein used exports from Chungcheongbuk-do and Icheon as indicators of SK Hynix's HBM shipments. In July, the export value in these two regions decreased by 28% compared to June and by about 27% compared to April.
Based on this, the baseline regression model estimates that SK Hynix's HBM revenue for the third quarter may be only $5.6 billion, a decrease of about 20% from the previous quarter, which is 55% lower than Bernstein's original forecast. If this prediction holds true, Samsung's HBM revenue in the third quarter will significantly surpass that of SK Hynix.
However, the uncertainty of this prediction is much higher for SK Hynix than for Samsung. The report also points out that if SK Hynix follows its historical seasonal pattern with shipments concentrated in the latter part of the quarter, its HBM revenue for the third quarter could still reach $12 billion, close to Bernstein's original forecast.
In other words, based on the same set of July data under different seasonal assumptions, there could be a huge range of $5.6 billion to $12 billion. At this stage, a more cautious assessment is not that "SK Hynix has already lost its lead," but rather that its performance at the beginning of the third quarter was weaker than expected, and whether it can catch up in August and September will determine the final market share.
Bernstein speculates that the weakness may come from delays in Rubin-related HBM4 shipments. SK Hynix had previously stated that HBM4 began mass production in the second quarter and will ramp up fully in the second half of the year. However, attributing the July export decline directly to NVIDIA's Rubin progress is still an analyst's inference based on industry dynamics and has not yet been explicitly confirmed by the companies involved.
HBM Did Not Follow the Traditional DRAM Price Increase Trend
The report also points out that the price trends of HBM and traditional memory are diverging.
Since the third quarter of 2025, the price of traditional memory has increased by about five times cumulatively, but the export unit price of SK Hynix's related products has remained generally stable. Samsung's unit price has approximately doubled, mainly driven by the increased proportion of HBM4, rather than a significant simultaneous price hike of existing products like HBM3E.
This means that the contract pricing, supply relationships, and product iteration cycle of HBM are partially detaching it from the traditional DRAM spot price fluctuations. The short-term price increase of traditional DRAM does not necessarily proportionally transmit to HBM, as the profit variations of the latter depend more on the proportion of new-generation products and annual customer contracts.
Bernstein believes that suppliers and customers have already begun negotiating 2027 HBM contracts, and expects that a price increase will drive upward revisions to Samsung's and SK Hynix's profit outlook next year. Compared to the share changes in a single quarter of the third quarter, this may be a more critical pricing variable for the next phase of the memory sector.
Malaysia's Exports Surge, Remains an Unresolved Variable in the Supply Chain
In July, South Korea's exports of multi-chip memory to Malaysia increased by 20% month-on-month to around $1.3 billion, continuing the rapid growth of the past several quarters. Samsung still accounts for the majority of this, but SK Hynix's exports have also increased significantly.
Bernstein speculates that this HBM may be flowing to Intel's EMIB advanced packaging facility in Malaysia, to equip server chips with HBM. However, the report also acknowledges that it is currently difficult to explain why the related exports are growing so early before product mass production.
Therefore, Malaysia's exports are more suitable as a follow-up supply chain clue, rather than directly equivalent to Intel's customer orders or specific product volume.
Overall, the July data strengthens the logic of Samsung catching up in the HBM4 cycle, but it is not yet enough to confirm that the long-term market share pattern has reversed. What really needs to be observed next is whether Samsung can continue the export growth in August and September, and whether SK Hynix can catch up on the shipment gap from the beginning of the third quarter as HBM4 ramps up.
Market Share Reversal Still Awaits August and September Data
The July export data reinforces the logic of Samsung accelerating its catch-up in the HBM4 cycle: the related export scale has significantly increased, unit value has rapidly risen, and it corroborates the company's provided HBM4 sales guidance.
However, this data is still insufficient to confirm that Samsung has already regained its leading position in the HBM market on an annual basis.
First, Bernstein's model uses regional exports and company revenue for regression, not actual order data from the companies. Second, if HBM packaging is shifted overseas from South Korea, or if some products are further packaged domestically in South Korea, customs data may not fully capture this. Finally, monthly exports are also subject to customer acceptance, shipping arrangements, and quarterly seasonal effects.
Next, we need to observe three variables: whether Samsung's August and September exports can continue to grow, whether SK Hynix's exports and unit value will rebound with the ramp-up of HBM4, and whether the contract price for HBM in 2027 for both companies can be substantially increased.
If Samsung's exports continue to grow while SK Hynix fails to catch up, HBM4 may drive a more substantial change in market share. If SK Hynix concentrates its deliveries in the last two months of the quarter, the divergence in July is more likely just a timing difference in shipments.
Therefore, the current data is not so much about the HBM competition having reached a conclusion, but rather about Samsung re-entering the race for market share at a pace that may be faster than previously anticipated by the market.

Translation: Peggy
Editor's Note: On August 19, the U.S. Treasury unexpectedly announced that it would increase the single-day liquidity support repurchase cap for 10-20 year and 20-30 year nominal Treasury securities from $20 billion to at least $40 billion, with the new arrangement set to take effect from September 9. Following the news, the long-end Treasury yields briefly declined by around 9 basis points, leading to a notable flattening of the yield curve.
However, the market quickly reverted to selling. The next day, the 10-year Treasury yield rose to 4.71%, and the 30-year yield approached its previous high. This prompted the market to question: if the repurchase size is relatively limited and has not yet been actually implemented, why did the Treasury choose to make an interim adjustment to the plan just two weeks after the quarterly refunding announcement?
ZeroHedge cited a report from J.P. Morgan's rate strategist Jay Barry, suggesting that the Treasury may not be addressing market liquidity dysfunction but rather expressing concerns about the rise in long-term yields. J.P. Morgan is genuinely worried not about the $40 billion repurchase itself, but whether the Treasury is deviating from "conventional and predictable" debt management principles to a more opportunistic approach to tenor and issuance management.
This distinction is crucial for the long-term pricing of Treasuries. If investors believe the Treasury is trying to suppress financing costs through repurchases or reducing long-dated supply without simultaneously improving the fiscal deficit, the temporary downward pressure on yields may not be sustainable. Instead, it may lead to an increase in term premiums, raising the cost of long-term borrowing.
Translation of the original text:
After the U.S. Treasury expanded its long-term Treasury bond repurchase, the market initially responded positively.
The Treasury announced that the single-day liquidity support repurchase cap for 10-20 year and 20-30 year nominal Treasury securities would be increased from a maximum of $20 billion to at least $40 billion. According to the Treasury's announcement, the new size will take effect from September 9, rather than entering the market immediately on the day of the announcement.
Following the news, long-end Treasury yields fell by about 9 basis points, and the yield curve also showed a similar level of flattening. However, this market trend did not last long. The next day, the 10-year Treasury yield rose to 4.71%, essentially reversing the post-announcement downturn.
JPMorgan Chase believes that the most noteworthy aspect of this repurchase adjustment is not the size, but the timing: the Treasury Department had just released a tentative repurchase schedule for the next three months in the August 5 quarterly refunding announcement, when the single-day repurchase limit for 10-20-year and 20-30-year bonds was still $20 billion.
Why Did the Treasury Department Increase the Size on Short Notice When the Market Was Functioning Normally?
US Treasury bond repurchases are mainly divided into two categories: cash management repurchases and liquidity support repurchases.
This adjustment targeted the latter. The Treasury Department repurchases less liquid off-the-run securities, i.e., bonds no longer from the most recent issuance, to improve the trading efficiency between different securities and provide market participants with predictable exit options.
Under this mechanism, the key consideration for increasing the repurchase size should typically be whether market liquidity is deteriorating.
Referring to the evaluation framework proposed earlier by the Treasury Borrowing Advisory Committee, JPMorgan Chase examined the repurchase auction sizes, the Treasury curve dislocation, and the valuation gaps between on-the-run and off-the-run bonds. The conclusion was that the relevant indicators for 10-20-year and 20-30-year bonds remained close to the average levels of the past year, showing no significant market dysfunction.
The report stated that the pricing bias of off-the-run bonds relative to the fitted yield curve has remained stable, significantly lower than the extreme levels of the past five years; the asset swap spreads between on-the-run and off-the-run bonds have not experienced significant dislocations. Overall, the operation of the US Treasury market this year has even improved.
Therefore, JPMorgan Chase interprets this temporary adjustment as a policy signal: the Treasury Department's concern may not be liquidity, but rather the long-term yield itself.
The Treasury Department Might Be Developing a New Long-End "Reaction Function"
JPMorgan Chase believes that there may be a common theme in recent policy actions—the Treasury Department showing increased sensitivity to rising long-term yields.
This involves a common market concept: reaction function, which is an informal rule where investors infer what actions policymakers may take under certain conditions based on their past statements and actions.
In JPMorgan Chase's view, the Treasury Department's decision to announce the repurchase adjustment a few hours before the 20-year bond auction and a day before the 30-year Treasury Inflation-Protected Securities auction may indicate its desire to alleviate long-end financing pressures. However, this is still an analyst's interpretation of policy intent, not a confirmed policy objective by the Treasury Department.
The report also points out that this year, U.S. bond yields have risen, with a significant portion of this move explained by the market's hawkish repricing of the Fed's policy path. According to J.P. Morgan's fair value model, the 10-year yield has not significantly diverged from fundamentals.
What has truly deviated is the longer end of the curve. Global long-term bond yields have generally risen, especially with the surge in Japanese long-term government bond yields, diminishing the relative attractiveness of U.S. bonds to some overseas investors.
During Japan's implementation of a negative interest rate policy and yield curve control, U.S. bond yields, after currency hedging, were more attractive than Japanese government bonds, helping to suppress U.S. long-end rates. Now, this mechanism is partially reversing: as Japanese long-term rates rise, it may reduce Japan's incentive to allocate funds to U.S. bonds and amplify upward pressure on the U.S. yield curve's longer end.
Repo Operations Address Symptoms, but Deficit Is the Core of Term Premium
J.P. Morgan's main criticism of the Treasury's strategy is that while repo operations can alleviate short-term pressures in the long-bond market, they cannot alter the fiscal backdrop of continuously increasing U.S. debt supply.
The report projects that the U.S. financing gap over the next several fiscal years could exceed $3.5 trillion. In this environment, the Treasury may ultimately need to offer more duration to the market, not less. Even if the Treasury reduces the size of long-bond auctions, it only shifts the funding requirement to other tenors without eliminating the overall borrowing need.
J.P. Morgan also notes that there has not been a collapse in demand at long-bond auctions. End-investor participation in 30-year Treasury bonds is at a record high for the year, and 20-year bond demand is also near a historical peak. This further weakens the argument that "temporary ramp-up through repos is necessary to improve market functioning."
The underlying issue remains the fiscal deficit. J.P. Morgan describes the current fiscal situation as a deficit of about 6% of GDP; the Congressional Budget Office's February baseline forecast for the 2026 fiscal year deficit is around $1.9 trillion, about 5.8% of GDP, with both estimates aligning closely.
The report suggests that without substantial fiscal consolidation, the market may view more flexible and opportunistic debt management as lacking credibility. Should the Treasury further deviate from "conventional and predictable" issuance practices, investors may demand a higher term premium to compensate for future supply, inflation, and policy uncertainty.
This implies that an operation aimed at lowering long-end rates may, in the long term, carry the risk of raising yields. However, this remains a risk scenario presented by J.P. Morgan rather than an outcome that has already occurred.
UK Experience: Adjusting Long-Bond Supply with Diminishing Impact
To assess whether the continued reduction in long-term debt supply can sustainably depress yields, J.P. Morgan referred to the UK experience.
The UK has lowered the proportion of long-term gilts to the net issuance from an expected 28.4% in April 2022 to the current 9.1%. Over the past four years, the UK DMO has adjusted the long gilt issuance share 12 times.
These adjustments often manage to flatten the yield curve in the short term. J.P. Morgan's analysis shows that in the five days following the announcement, the spread between UK 5-year and 30-year gilt yields narrows by an average of around 2 basis points; looking at a ten-day window around the announcement, the average reduction is around 5 basis points.
However, this impact is not enduring, and with repeated similar operations, each announcement's uplifting effect on long-end gilts gradually diminishes. Despite the UK base rate falling 175 basis points from its cyclical peak, long UK gilt yields remain near multi-decade highs.
Based on this assessment, J.P. Morgan believes that the US expanding repo or reducing long-dated issuance may also temporarily lower long-end yields but could struggle to alter the longer-term trajectory. Without a simultaneous narrowing of the fiscal deficit, structural supply adjustments are unlikely to serve as a sustainable tool for lowering funding costs.
Going forward, the market will need to observe not only whether the Treasury continues to increase repo sizes but also whether it trims the auction sizes of 20-year and 30-year bonds, and if there are substantive changes in the fiscal deficit, foreign demand, and term premium.
If long-end yields continue to rise post-repo actualization or if the market's reaction to each policy tweak becomes increasingly short-lived, it would bolster J.P. Morgan's view that "debt management cannot substitute fiscal rectitude." Conversely, if market liquidity metrics significantly deteriorate while repos continue to enhance trading efficiency, this adjustment is more likely to be deemed a technical operation rather than the Treasury's direct attempt to control long-term rates.

TL;DR
·INTerpath-001 Phase III successfully validated Moderna's mRNA platform's ability to move beyond respiratory vaccines, but full efficacy data has not been disclosed.
·Moderna's unprecedented 177% surge in a single day is difficult to explain by pipeline value alone, as platform revaluation, short covering, and the "cancer vaccine" narrative all contributed to the rally.
·The success in melanoma cannot be directly extrapolated to other indications such as lung cancer and kidney cancer, highlighting the importance of cross-tumor replication for platform value realization.
·INT is fundamentally a personalized tumor therapy, and customized production costs and a 50/50 profit split may constrain profit realization.
·Clinical breakthroughs have occurred, but cross-tumor efficacy and commercialization efficiency are yet to be validated, and Moderna's inflection point in performance remains unconfirmed.
On August 19, Moderna and Merck announced the Phase III topline results of the individualized neoantigen therapy, intismeran autogene (INT), in combination with Keytruda for high-risk melanoma.
INTerpath-001 enrolled a total of 1137 patients who had undergone surgical resection and had not received systemic therapy before, with stage IIB to IV skin melanoma. In the interim analysis, the trial met both the primary endpoint of recurrence-free survival (RFS) and the key secondary endpoint of distant metastasis-free survival (DMFS) simultaneously. Overall survival data is still immature, and the trial will continue.
The company has only confirmed that the results are statistically significant and clinically meaningful, without disclosing specific hazard ratios, confidence intervals, patient subgroups, and complete safety data. In other words, the market has acknowledged the trial's success, but the exact strength of the efficacy is still unknown.
Following the announcement, Moderna surged by approximately 177% to $174.38, adding about $45 billion to its market value; Merck rose by around 13% to $152.20, increasing its market value by about $50 billion. The market's debate quickly shifted from "can the trial succeed" to "can such a surge be supported by fundamentals."
Clinical breakthrough is real but insufficient to explain a 177% surge
Bernstein believes that INTerpath-001 achieving RFS and DMFS endpoints in the interim analysis suggests that the efficacy may be quite positive.
Interim analyses typically require higher statistical thresholds. The report speculates that the RFS hazard ratio for the Phase III trial may be between 0.50 and 0.65, and the DMFS hazard ratio may be close to 0.40, aligning with the earlier Phase II data.
A hazard ratio below 1 means that the combination therapy group had a lower relative risk of recurrence, distant metastasis, or death compared to the Keytruda monotherapy group. For example, a hazard ratio of 0.50 roughly represents a 50% reduction in the risk of the events of interest, but does not equate to half of the patients being cured.
The above interval is only a Bernstein's speculation based on statistical thresholds and historical data, not the company's disclosed Phase III results. Specific efficacy, safety, and overall survival trends still await complete data.
However, the significance of this trial is not limited to melanoma. It marks Moderna's first key trial success outside of the respiratory vaccine, demonstrating an individualized neoantigen regimen that can further enhance Keytruda's efficacy in a Phase III study.
This provides crucial clinical evidence for mRNA's expansion from infectious disease vaccines to cancer treatment and serves as the starting point for the market to reassess Moderna's platform's value.
Market Trading Reflects Platform Revaluation and Short Covering
Clinical results can explain the stock price increase but are insufficient to explain the magnitude of the rise.
Bernstein believes that even with a highly optimistic outlook for all of INT's late-stage projects, it is difficult to support Moderna's approximately 177% single-day surge. This round of market activity is mainly driven by the combination of three forces:
The clinical success reduces the remaining risks of the melanoma project;
Investors are starting to price in the platform potential of mRNA expanding to more cancer types;
A high short position has triggered short covering, amplifying short-term buying pressure.
Before the results were announced, approximately 14% to 15% of Moderna's outstanding shares were shorted. After the clinical results exceeded pessimistic expectations, short sellers were forced to cover, and investors who were previously underweight on the stock began to chase the price higher. Moderna's trading volume that day was close to 200 million shares, roughly equivalent to half of the company's total shares outstanding.
MRNA stock price chart (left) and short interest ratio chart (right). Moderna's stock price, after a sharp rise on August 19, 2026, has returned to pre-pandemic levels, while around 14-15% of outstanding shares were shorted, setting the stage for a short squeeze. The clinical data triggered the increase, but short covering further amplified the gains.
The news label of "Cancer Vaccine Success" further reinforces the dissemination effect. Compared to "Individualized Neoantigen Therapy Phase III Reaches Endpoint," this description more easily leads the market to associate with a broad platform covering multiple cancer types.
Therefore, clinical data was the catalyst for the rise, while platform narrative, short covering, and news effects amplified the surge. The increase in stock price does not necessarily mean the market has confirmed that INT can generate equivalent revenue and profit.
Melanoma is Just the Beginning, Platform Replication Yet to Be Verified
Moderna and Merck are currently conducting four Phase III trials and five Phase II trials around INT, covering melanoma, non-small cell lung cancer, renal cell carcinoma, and bladder cancer, and are beginning to enter unresectable or metastatic tumors.
Bernstein estimates that the potential U.S. patient population corresponding to INTerpath-001 is approximately 13,000 to 19,000 people, accounting for about 30% of the Phase III and potential registrational Phase II projectable patient population, and about 17% of all Phase II and III projects.
The potential U.S. patient population corresponding to INTerpath-001 is approximately 13,000 to 19,000 people, representing only about 30% of the total projectable patient population for current key projects and about 17% of all Phase II and III INT studies. The success in melanoma does not mean that lung cancer, kidney cancer, and other cancers will automatically replicate the same results.
If projects such as lung cancer, kidney cancer, and bladder cancer can also replicate the success of melanoma, INT's market space will significantly expand. Bernstein currently gives an early, unadjusted for risk, sales estimate of around $2.4 billion for melanoma and lung cancer.
The report also uses Keytruda as an upside reference: its early cancer indications are estimated to generate around $7.9 billion in revenue by 2025 and an estimated $9.2 billion by 2028, while INT's future pricing may be higher than Keytruda.
However, the $2.4 billion is an unadjusted for risk sales forecast, not profit, and certainly not realized performance. INT also does not yet cover several key indications such as triple-negative breast cancer, cervical cancer, and head and neck cancer where Keytruda is used.
More importantly, melanoma typically has strong immunogenicity, and its success cannot be directly extrapolated to tumors like lung, kidney, and bladder cancers with different immune environments.
INTerpath-001 has demonstrated the potential for platform replication, but has not proven that replication will happen. The market has already priced in the success of other cancer types, but relevant clinical data is still pending.
Therefore, Bernstein maintains its Moderna at a "market perform" rating and a $45 target price, well below the closing price of $174.38 on August 19.
The Blurred Label of "Cancer Vaccine"
INT is not a preventive vaccine for the general population but a personalized treatment for cancer patients. Currently, it is used as adjuvant therapy for patients after tumor resection, aiming to reduce the risk of recurrence and distant metastasis from residual lesions.
Each patient's tumor tissue and blood samples are individually collected for genetic sequencing and algorithm analysis. The system identifies up to 34 specific neoantigens from the patient's tumor mutations and then produces the corresponding mRNA construct to induce a T cell response against the tumor.
Therefore, although INT utilizes Moderna's mRNA platform, its commercial model is more akin to personalized cancer drugs:
The target patient population is in the tens of thousands, not tens of millions or billions as with traditional vaccines;
Each patient requires individual sequencing, design, and production;
Production costs are challenging to quickly amortize like batch vaccines;
Regulation, pricing, and reimbursement will also follow the path of oncology drugs.
The term "Cancer Vaccine" is an easily spread label that may exaggerate the market's perception of patient scale while downplaying the reality constraints of individualized production costs and commercial efficiency. The incremental impact of INT's success on traditional vaccine raw material suppliers is also relatively limited.
One Billion Dollar Revenue – How Much Profit Can Be Retained?
Compared to the revenue outlook, Bernstein is more concerned about INT's profit margin.
Merck will be responsible for global commercialization, with Moderna participating in joint promotion in the U.S., and Merck independently handling marketing and sales outside the U.S. Both parties will share costs and profits according to the agreement.
Using melanoma as a single indication example, Bernstein assumes that INT's peak sales will reach $1.2 billion, with the gross margin gradually increasing from 35% at the initial public offering to 60%. After deducting about $250 million in sales and administrative expenses and profit sharing, the mature stage is expected to contribute approximately $0.6 per share to Moderna's earnings.
This is Bernstein's scenario calculation and not company guidance. It illustrates that even if INT becomes a billion-dollar product, the costs of individualized production and profit sharing will still limit profit realization.
The current market pricing, however, already implies several favorable conditions: successive successes in other cancer types, smooth expansion of customized production, pricing and reimbursement implementations, and ongoing gross margin improvement. These conditions have not yet been fully validated.
For Merck, the strategic value of INT lies mainly in expanding Keytruda's use. Most trials are designed with "INT + Keytruda" compared to "Keytruda monotherapy," so INT is initially used as an add-on therapy rather than a Keytruda alternative.
If the combination regimen becomes a new standard of care, Bristol Myers Squibb's Opdivo, Roche's Tecentriq, and AstraZeneca's Imfinzi may face market share pressure in certain melanoma and non-small cell lung cancer markets. However, the lower initial gross margin and profit sharing may also weigh on INT's contribution to Merck's operating profit margin.
Therefore, Merck's market cap increase of around $50 billion is also challenging to be solely explained by the current melanoma project's profit.
Pharmaceutical Sector Rises, Influenced by AI Trading Rotation
Bernstein believes that this rally is not solely a Moderna stock story.
The report observes that recently, the pharmaceutical and semiconductor sectors have shown some reverse trading characteristics. Against the backdrop of increasing AI and semiconductor holdings, pharmaceuticals are beginning to be seen by some investors as a relatively clean defensive option: less affected by economic cycles, while potentially benefiting long-term from AI applications in drug R&D and clinical trials.
By 2026, the Pharmaceutical Sector Index (DRG) and the Semiconductor Index (SOX) have shown distinct reverse trading characteristics. When there is volatility in the AI theme and funds flow out of the tech sector, the pharmaceutical sector receives inflows as a defensive asset. The rise of Moderna is not just a stock story but also a result of sector rotation.
This is just Bernstein's interpretation of fund behavior and does not imply a stable negative correlation between pharmaceuticals and semiconductors. However, when tech stocks become more volatile, fund rotation may provide additional buying pressure for the healthcare sector and amplify the market impact of INT's clinical results.
Thus, Moderna's rise contains three layers of trades: the core is the melanoma Phase III success, the middle is the mRNA platform revaluation, and the outer layer is short covering and sector rotation. The further out, the greater the distance between the market and quantifiable fundamentals.
From Clinical Breakthrough to Inflection Point, Three Confirmations to Go
INTerpath-001 has already demonstrated that mRNA personalized neoantigen therapy can succeed in a large Phase III trial. However, to define it as Moderna's inflection point, at least three confirmations are still needed:
First, complete Phase 3 data. Specific risk ratio, safety profile, patient subgroups, and overall survival trends will determine the true benefit of INT relative to Keytruda monotherapy.
Second, cross-cancer replication. Subsequent results in lung, kidney, and bladder cancers will determine whether melanoma is just a niche advantage or the starting point for a broader oncology platform.
Third, commercial efficiency. Custom manufacturing timeline, production capacity, pricing, reimbursement, and gross margin will determine whether revenue can convert into profits sufficient to support the valuation.
Bernstein does not deny the clinical value of INTerpath-001. Its true warning is that the market has rapidly shifted from a successful melanoma trial to a multi-cancer platform and the endgame pricing for long-term profitability.
Clinical breakthrough has occurred, but the inflection point in performance is yet to be confirmed. The current share price trades more on the imagined success of the platform and short-term demand amplified by significant short positions.

Previously, we spent a lot of time discussing the logic behind the rise in long-term bond yields in Europe and the United States, as well as the various methods central banks and ministries of finance have come up with to address this. Finally, last night, we saw the U.S. Department of the Treasury directly using repurchase agreements to suppress long-term government bond yields. The Treasury Secretary stated, "The current maximum size of $2 billion per operation will be at least $4 billion per operation." I think there are a few points I would like to share: 1. Although this is not in the traditional sense what is known as Yield Curve Control (YCC), in terms of definition and the operational entity, you can find many differences, but such nitpicking discussions are meaningless; this is the government directly intervening in its own funding costs. And I also think there is no need to debate whether this practice will have a long-term effect; the core issue is how far the government is willing to go and what price it is willing to pay. 2. A few days later, remarks from the Fed or Warsh at Jackson Hole became very subtle. It is known that he often communicates with Benson, and the market has always been saying that the Fed needs to raise rates and increase communication to reduce policy uncertainty. However, you can see that Warsh is not as hawkish; in the latest minutes, he tries to continue to reduce communication frequency. This difference is very clear. I think ultimately this is a short-term and long-term issue.

On the afternoon of August 19, the US Treasury changed a number on its official website.
The single-time limit for long-term Treasury bond repurchase was raised from $20 billion to $40 billion.
No new repurchase transactions took place that day. The Treasury did not spend an extra dollar. Yet, the 30-year Treasury bond yield quickly dropped by around 9 basis points.
Here, a basis point is the second decimal place in an interest rate. 9 basis points equal 0.09 percentage points. The bond yield is the interest rate the US offers to borrow money, so an increasing yield indicates a higher cost of borrowing.
This price tag was already stretched tight. On August 18, the 30-year Treasury bond yield reached a 19-year high. The US government is the largest borrower in this market, holding about $30 trillion in tradable Treasury bonds. If all these bonds were refinanced simultaneously at a rate just 1 basis point higher, the annual interest would increase by about $30 billion. While this won't happen all at once, as old bonds mature, the costs will gradually come in. But the direction is certain.
It's not just quoting for the US Treasury. Interest rates on American mortgages, loans for businesses, and the compensation investors demand when other countries issue bonds often take cues from this curve. The long end refers to the segment of borrowing that lasts longer, including the 10-year and 30-year periods. If the long end suddenly becomes more expensive, the market won't treat it as just the headache of bond traders.
This time, the Treasury adjusted the amount for repurchasing long-term Treasury bonds.
Repurchase may sound like reclaiming IOUs and reducing debt. It's not that clean. The Treasury usually uses cash raised from new bond issuances to buy back older, less liquid securities on the market, then continues to issue new Treasury bonds. The total debt does not disappear into thin air. What changes is which batch of bonds the market holds more of and which batch is harder to sell. For traders holding a certain segment of long bonds, this difference is already significant.
As soon as the announcement was made, long-term yields fell. The money hadn't gone out yet, but the market had already priced in the money that might go out in the future.
Gold rose by about 4% on the same day, the US dollar index fell to its lowest level since mid-May, and the S&P 500 closed up by 0.34%. Superficially, this is a familiar trade. Yields go down, and risk assets breathe a sigh of relief.
But if you zoom in, things are not so neat.
The Treasury Really Bought $20 Billion the Day Before
In the regular repurchase agreement on August 18, dealers wanted to sell about $200 billion in Treasury bonds to the Treasury, but the Treasury only bought $20 billion.
This money was not wasted. It provided a buyer for some old securities and also signaled to the market which securities the Treasury was willing to touch. However, after the operation, long-term yields still rose.
The next day, the Treasury did not buy any bonds but only increased the limit on the schedule, yet prices moved.
This is also the real point of interest in this matter. The market was trading not only today's $20 billion, but also a schedule for the coming weeks. The schedule informed everyone of the maximum amount the Treasury was willing to take if long-dated bonds continued to be difficult to sell. No one needed to wait for it to act; positions could be adjusted in that direction in advance.
Yellen has always known that the role he plays here is not quite like the traditional Treasury Secretary. He has referred to himself multiple times as America's "Chief Bond Salesman" and has openly stated that pushing the 10-year Treasury yield below 4% is a goal.
The most uncomfortable moment for a salesman is not when you don't have any inventory but when everyone is asking the same question: How much of a discount should be applied to your batch of goods?
On August 18, the Treasury did not change the answer with $20 billion. On August 19, it doubled the potential buying amount, and the market began to reassess this discount.
Excess $14 Billion from Seven Operations Goes into New Bonds
According to the Treasury's preliminary schedule, from September 9 to November 4, a total of seven repurchase agreements were arranged for the long end. The cap for each operation was raised from $20 billion to $40 billion, increasing the total amount bought back in the seven operations from $140 billion to $280 billion.
What was truly in excess was the middle $14 billion.
In the same quarter, the Treasury plans to issue over $230 billion in new bonds from the 10-year to the 30-year range. Comparing the $14 billion, it only corresponds to about 5.9%. And this is even a favorable comparison for the repurchase. The repurchase targets existing securities, while the new bonds are a separate set of securities. The market is truly facing the entire yield curve and the continuously rolling stock.
From an interest rate risk perspective, this amount does indeed seem larger than face value. The longer the borrowing, the more sensitive bond prices are to interest rates. The bond market calls this level of sensitivity duration. If the Treasury bought securities near the 30-year maturity, the $14 billion would take away a duration equivalent to about 30% of a 30-year auction.
But a 30% auction is not a 30% market.
Using the duration estimate commonly seen in quantitative easing research to mechanically extrapolate, the direct impact of such an increment on the yield is less than 1 basis point. This algorithm cannot serve as a verdict. Quantitative easing is the central bank's continuous purchase, while the Treasury repurchase is a limited number of security management; the buyers, expectations, and funding sources are different. It at least indicates one thing: it is difficult to explain the fluctuation of 9 to 11 basis points on the long end on that day solely based on a $14 billion spot flow.
The remaining part, no one can precisely break it down. The market will not specify at every basis point which point belongs to actual supply, which belongs to traders closing out positions early, and which comes from speculation on the next step of the Treasury.
Some people are therefore reminded of the 1961 "Operation Twist." Back then, the Federal Reserve and the Treasury tried to independently lower long-term interest rates by selling short-term debt and buying long-term debt. The two actions are not the same. The actions back then involved a genuine maturity swap. This time it's about the upper limit. However, they both encountered the same problem: if the government does not want the price of long-term borrowing to continue to rise, how much debt can they take out of the market.
On August 19, the market answered a part of that for the Treasury.
The Bond Market Only Presses the Long End, Inflation Remains Unchanged
Looking at August 18 and 19 together, the 10-year nominal yield dropped by 6 basis points. The nominal yield is the market return corresponding to the bond's face value.
At the same time, the real yield on 10-year Treasury Inflation-Protected Securities (TIPS) also dropped by 6 basis points. It subtracts the market's inflation compensation, getting closer to what investors can actually obtain in purchasing power.
Both lines moving down, and the 10-year breakeven inflation rate stuck in the middle did not change. The same goes for the 30-year.
The breakeven inflation rate is not a crystal ball; it also includes liquidity and risk premium. However, with both sides moving down and the difference unchanged, it at least shows that the bond market did not take this news as an opportunity to raise bets on long-term inflation. The 2-year and 3-month terms hardly reacted, indicating that traders did not interpret it as the Fed changing its rate hike or cut path because of this.
The minutes of the July Federal Reserve meeting released that evening had a somewhat hawkish tone. Three members at the meeting advocated for an immediate 25-basis-point rate hike. Normally, such documents would nudge the rates in the other direction. Having read it, the short end did not react. After reading the Treasury’s schedule, the long end made the first move.
Two documents on the same day. One discussing how expensive money should be borrowed, and the other discussing how many IOUs promising long-term payment from the market will be in excess.
A bond trader temporarily treats it as the latter.
Gold Doesn't Believe This Is Just a Tweaking of the Bond Variety
Gold and the dollar read something more.
Gold rose by about 4% that day, with silver seeing an even larger increase. The US Dollar Index fell by 0.86%, dropping below the 200-day moving average to its lowest level since mid-May. The 200-day moving average is simply the average price over the past 200 trading days, but many algorithms and funds treat it as a significant line. When the price crosses this line, some positions will not question the reason anymore and will start selling.
During the Asian and European sessions on August 20th, the gold price dropped below $4,500, with most of the previous day's gains still intact.
Deutsche Bank's Head of Foreign Exchange Research George Saravelos referred to this interpretation as "soft financial repression." This term is not mysterious. The government is unwilling to let interest rates rise to the level that the market is willing to accept, so it pushes down the price of borrowing long-term through debt issuance arrangements, bond buybacks, and policy signals. No one is required to lend at a low interest rate, so it is considered soft. However, the losing end is still clear, as those receiving interest will receive slightly less, and borrowers will pay slightly less.
Saravelos places this within the context of "distortionary policies." Gennadiy Goldberg of TD Securities used a shorter phrase, saying that the Treasury Department is engaging in "verbal intervention." Wil Stith of Wilmington Trust sees another layer, with the Federal Reserve and the Treasury Department pushing in not entirely the same direction.
The bond market can only see a change in the supply of long-term bonds. Gold cannot forget that those issuing the debt are also the rule-makers.
If long-term interest rates are being held down by a schedule, and the minutes of the Federal Reserve meetings still indicate a tightening bias, adjustments must be found elsewhere. The forex market is most likely to pick up on this unease first.
S&P Rose Only 0.34%, But Changes are Afoot Below the Index
At the close of the US stock market, the easiest sentence to write was that falling yields boosted risk sentiment, and the S&P 500 rose by 0.34%.
However, on that day, there were far more rising stocks than falling ones. The New York Stock Exchange's advance-decline ratio was about 1.56 to 1, while Nasdaq's was about 2.16 to 1. For every falling stock, there were more than one rising stock standing beside it.
Despite this, the Nasdaq 100 closed lower, and the Philadelphia Semiconductor Index fell by nearly 2%.
Driving the index down were the tech stocks with the highest weighting. Supporting the index was the healthcare sector, which rose over 3% that day, hitting a record high. Moderna surged about 177% in a single day as its personalized mRNA cancer vaccine received positive Phase 3 data. Phase 3 clinical trials are one of the largest hurdles before a drug is approved. When a company succeeds at this stage, its stock price can react as if it suddenly adopts a new valuation system.
So, it wasn't a day of "all stocks rising." Funds were simultaneously pouring into healthcare and small-cap stocks while exiting the most expensive and future cash flow-dependent tech stocks.
This kind of divergence has been happening for a while this year. In market-cap-weighted indices, the big companies carry the most weight. Equal-weight indices give each company an equal say. The equal-weighted index of the seven tech giants only saw a single-digit increase year-to-date. Excluding these seven, the performance of the remaining 493 companies in the S&P 500 was actually better. The Russell 2000 also had its best year in 23 years.
Those investing in indices see a rising line. Those invested in the most famous stocks, however, receive a different report card.
Three Trillion Dollars Yet to Be Accounted for, But Interest Rates Are Already Knocking
The tech selloff does not mean a sudden disappearance in AI demand.
What the market is more concerned about is the money these companies have promised to pay in the future.
Long-term contracts for renting data centers. Commitments to buy computing power. Power, server, and supply agreements. Some of these items may be listed as liabilities, while others are only disclosed in financial report footnotes and cannot all be labeled as debt. The common thread is that even though the payment due date has not arrived, the cash flow has already been allocated for the next few years.
According to a recent analysis by The Wall Street Journal, nine large tech companies have approximately $3 trillion in such future commitments. Their disclosed annual capital expenditures total around $600 billion.
Only when the numbers are put together does the outline of the problem become clear. The money companies are spending each year is one layer, while the money they have promised but not yet paid is a much larger layer.
As long-term interest rates rise, this larger layer becomes less appealing. When refinancing is needed, money becomes more expensive. When explaining today's investments with profits far into the future, the discount rate is higher. The reported revenue growth of Anthropic and OpenAI was recently revealed to be lower than expected, prompting the market to naturally question whether the same batch of future cash flows is sufficient to cover those commitments that have already been made.
On August 18, investors were not selling the idea of AI. What they were reevaluating was a lengthy payment schedule.
The Korean market took a more direct approach to the matter. On August 18, the Korea Composite Stock Price Index fell by 5.8%, with SK Hynix dropping nearly 10%. SK Hynix is a major player in the memory chip industry and a supplier to NVIDIA. At the opening on August 20, SK Hynix announced a $28.6 billion buyback plan, leading to a 6% rebound in the index.
The buyback here is not the same as that of the U.S. Treasury. When a company buys back its own stock, it returns money to its shareholders, signaling to the market that the company is willing to support its stock price. The Treasury, on the other hand, buys back old bonds, managing how the IOUs stack up between maturity dates and bond types.
Same word, different books.
On August 19, the U.S. Treasury's move was merely adjusting the upper limit on the buyback schedule.
The bond market interpreted this as a potential reduction in the long bonds held by the market in the coming weeks. Gold interpreted it as borrowers attempting to restrain the price of borrowing. The stock market initially breathed a sigh of relief for lower yields, but then turned around to calculate how much those distant payment promises were actually worth.
On that day, the Treasury did not spend a dollar on this adjustment.
Yet in a market where a loan lasts 30 years, an unrealized promise already has a price.
Original Article Link

Broadcom's proposed massive debt financing brings AI infrastructure's cash flow constraint to the forefront. Local approvals and enterprise deployments simultaneously prove that, beyond funding, power, licensing, and data governance remain the boundaries of expansion.
1｜Broadcom Plans Over $600 Billion in Debt Financing, Extending Credit Chain for AI Infrastructure
Reuters reported on August 21 that Broadcom is in talks with a group of lenders to raise over $600 billion in debt financing for companies like Anthropic's AI chip. Bloomberg stated that the plan may include around $300 billion in subordinated debt and a $600 billion to $700 billion senior secured portion, with a total size of up to $1 trillion. The deal is not yet finalized, with Broadcom and Apollo not responding to requests for comment, and Blackstone declining to comment.
Reuters said this debt may be issued by a special purpose entity and extend beyond the $35 billion mining expansion arrangement Broadcom, Apollo, and Blackstone reached in June. Infrastructure investments primarily in procurement, leasing, and equity are now layered with longer-term debt and collateral.
This does not signal an industry-wide shift in financing models but will draw more attention to whether leases, chip supply, and customer payments can support debt repayment. The next test of mining expansion is shifting from accessing capital to establishing contractually payable cash flows.
(Source: Reuters / Bloomberg / Blackstone)
2｜Data Center Expansion Meets Power and Approval First
According to NPR, Reuters, and The Verge, a town in Michigan passed a law prohibiting the construction of power facilities for data centers. Loudoun County, Virginia, has also begun tightening approvals for new projects. Related statistics indicate that at least 75 major data center projects in the U.S. have been delayed or canceled, involving funds exceeding $130 billion. The scope of the statistics and project status still need to be updated as local permits progress.
These resistances involve grid access, water usage, noise, and land utilization. For residents, when the tax revenue and construction jobs brought by data centers are insufficient to offset infrastructure costs, projects shift from investment attraction topics to local political issues.
Financing like Broadcom's can expedite equipment procurement but cannot replace power capacity and planning approvals. Therefore, the shortfall of AI infrastructure lies not only in chip capacity but also in whether projects can secure stable, sustainable local support.
(Source: NPR / Reuters / The Verge / Michigan State Local Legislation)
3｜Anthropic Advocates Private Deployment as Enterprise Procurement Shifts to Data Control
Anthropic announced that enterprise customers can use the service on their private cloud infrastructure without going through their servers. The latest Corporate Expenditure Observatory data from Ramp shows that OpenAI accounts for 44% of enterprise AI spending in the sample, while Anthropic accounts for 40%. These data do not represent the overall market share but indicate that the gap between the two on the enterprise procurement side is narrowing.
Competition is also entering the deployment and compliance aspects. Both companies have taken opposite stances on Massachusetts AI security legislation, and Anthropic's corporate investment division has also acquired an AI consulting company, expanding into on-the-ground services. They are no longer just comparing model invocation prices or scores.
Where enterprise customers keep their data, how to integrate into existing workflows, and who takes on compliance responsibilities will all impact procurement decisions. Model capability remains a prerequisite, but deployment architecture is becoming the watershed for turning trial users into long-term contracts.
(Source: Anthropic / Ramp / CNBC / TechCrunch)
4 | CFTC Prepares for Crypto Rules as Institutional Void Awaits Congressional Fill
The CFTC chairman has informed staff to prepare for developing cryptocurrency regulatory rules. The Senate has postponed the consideration of the CLARITY Act to September 15, keeping the timing of congressional legislation moving further back. Preparation does not equate to rules being issued, and the scope of CFTC authority, the inclusion of trading platforms, and the boundaries with the SEC still need to be seen in subsequent documents and processes.
While the bill's progress has slowed, exchanges, prediction markets, and AI companies are increasing their policy advocacy. What the industry needs is not just one regulatory agency taking the lead but a framework that can be aligned with securities regulation, consumer protection, and market structure.
If the CFTC initiates rulemaking first, it could reduce the institutional void in the short term and may open up authorization disputes and judicial review first. Regulatory certainty depends on rule text, enforcement boundaries, and Congress's final choice, rather than the mobilization signal of a single agency.
(Source: CFTC / CoinDesk / The Block / Politico)
5 | Iran Sanctions Escalate, Trade and Shipping Remain Effect Variables
U.S. Treasury Secretary Scott Benett stated that the new round of sanctions aims to weaken Iran's economic capabilities. Earlier, the UAE announced the suspension of trade, commercial dealings, and financial transactions with Iran, while an advisor to the Central Bank of Iran stated that they are prepared for more severe economic pressure. Several actions indicate that pressure has moved from spillover security risks to settlement and trade processes.
However, a sanction declaration does not automatically equate to a comprehensive blockade. Whether Iran can continue to maintain some energy and commodity flow depends on how third-party transactions, shipping insurance, and settlement channels adjust. The Axios report on the Hormuz shipping channel also indicates that parties are still trying to sustain some oil movement.
Therefore, the effect of sanctions should be measured by actual trade, shipping, and settlement data, rather than by verbal goals. The transit volume through the Hormuz Strait has not yet returned to normal, and economic pressure and energy flow are still interplaying. (Continuation of yesterday's report)
(Source: CNBC / Reuters / Axios / Central Bank of Iran)
Also Worth Knowing ↓
NVIDIA has denied reports that it will ship a new AI chip to China by the end of the year. The Information previously claimed the company had such shipment plans, which NVIDIA later denied. The back-and-forth between the report and the denial demonstrates that chip supplies to the Chinese market are still jointly affected by export policies and product arrangements. (Source: The Information / NVIDIA)
According to The Information, Meta has become Microsoft's largest AI customer, with AI compute usage on Azure surpassing Microsoft's own Copilot business. This development reflects a deepening collaboration between model training companies and cloud service providers, making it harder to distinguish between cloud vendors' customers and competitors. (Source: The Information)
SK Hynix is giving approximately $50,000 in annual bonuses to all employees. According to reports from Yonhap News Agency and Reuters, this arrangement sets a new record in the South Korean semiconductor industry. Profits driven by high-bandwidth memory demand, such as HBM, are being channeled into talent incentives and capacity expansion. (Source: Yonhap News Agency / Reuters)
Reportedly, Greg Brockman is adjusting the reporting relationships of multiple teams upon his return to OpenAI. The organizational arrangements' impact on the collaboration between research and development, product, and business teams will still need to be observed through subsequent personnel and product decisions. (Source: The Information)
Axios cites a study indicating that AI-generated content now makes up about one-third of new internet pages. The conclusion is influenced by the sample and definition of this estimation, but content moderation, source attribution, and retrieval quality are becoming common issues at the platform and tool levels. (Source: Axios)
According to CNBC and Bloomberg reports, Kevin Warsh will address debates around monetary policy space at the Jackson Hole Symposium. The market is more concerned about his public statements on policy independence, inflation, and interest rate paths rather than the event itself. (Source: CNBC / Bloomberg)
OpenAI has open-sourced the Codex Agent Framework. Developers can inspect and modify the agent harness located between applications and models, integrating Codex into their own products and workflows. This release focuses on the agent loop and integration layer, rather than the GPT model weights, expanding the competition for programming agents to the embeddability in enterprise software. (Source: OpenAI Developers)

Translation: Peggy
Editor's Note: On August 19, the U.S. Treasury Department announced an expansion of long-term bond repurchases, increasing the one-time maximum repurchase size for 10–20 year and 20–30 year treasuries from $20 billion to at least $40 billion. Previously, the 30-year bond yield had surged to around 5.34%, reaching its highest level since 2007. After the news was announced, the long-end yield quickly retreated.
This provided the market with a clear bullish signal: the Treasury Department is actively improving long bond liquidity, possibly even forming some kind of "Treasury backstop" expectation.
However, Marcus Nunes, in "The Treasury's $4 Billion Band-Aid," presented a contrarian view: while repurchases can indeed alleviate liquidity issues, if the long bond pressure stems from a larger fiscal deficit, higher bond supply, and weaker marginal demand, then a $40 billion repurchase does not address the true contradiction.
In other words, the market needs to distinguish between two things: the Treasury can make bonds trade better, but it cannot reduce the amount the U.S. government ultimately needs to finance through repurchases.
Below is the translation of the original article:
On August 19, U.S. Treasury Secretary Scott Bessent announced that the single-trade liquidity support repurchase size for 10–20 year and 20–30 year treasuries would be increased from a maximum of $20 billion to at least $40 billion. The market reacted swiftly. The 30-year Treasury yield, which had previously surged to around 5.34%, subsequently retreated significantly, with stocks, gold, and other assets rallying simultaneously.
However, the author of this article, Nunes, believes that this reaction easily leads the market to overlook a more fundamental issue: Treasury repurchases address liquidity, not the fiscal deficit.
Repurchases can improve trading but will not reduce government financing needs
Treasury repurchases are not quantitative easing.
When the Federal Reserve conducts QE, it can create base money to purchase treasuries by expanding its balance sheet; the Treasury does not have this ability. The funds used to repurchase old debt ultimately come from government cash or new debt financing.
Therefore, Treasury repurchases are fundamentally closer to debt structure management.
It can repurchase inactive old securities to increase market liquidity and, to some extent, boost demand for specific maturity bonds, but it does not change one fact: the U.S. government still needs to finance the fiscal deficit by issuing bonds.
The scale difference is particularly evident. The U.S. Treasury previously projected a need for net borrowing of $739.0 billion in the third quarter of 2026, while the size of this long-term bond repurchase has only been increased from $20.0 billion to at least $40.0 billion.
This is also why Nunes refers to it as a "Band-Aid." While $40.0 billion is enough to improve the market trading conditions for some long bonds, it is challenging to change the supply-demand dynamics of the entire U.S. bond market.
What is really weighing on long bonds is the growing fiscal supply
In Nunes's framework, the recent rise in the 30-year U.S. bond yield to above 5% cannot be simply understood as a liquidity issue. More importantly, the amount the U.S. government still needs to finance is significant.
In July 2026, the U.S. federal fiscal deficit reached $432.0 billion, a 48% year-on-year increase, hitting a record high for the month of July; the fiscal year-to-date deficit for the first ten months is around $1.8 trillion, already surpassing the full-year level of the 2025 fiscal year.
U.S. Federal Deficit—Annual Comparison
Meanwhile, the total U.S. federal debt exceeded $40.0 trillion on August 19. With the expanding debt scale and rising funding costs over the past few years, interest expenses are also increasing.
This means that the core issue the U.S. Treasury faces is not "old bonds are illiquid," but rather: who will absorb such a huge new bond supply in the future? If investors believe that future fiscal deficits will remain high, they will demand higher yields to absorb the long-term bond supply.
From this perspective, the 30-year yield breaking 5% may not be a sign of a temporary market malfunction but a repricing of U.S. fiscal and term risks.
The buying pressure issue is not something $40.0 billion can solve
Nunes also emphasizes the change in overseas demand.
According to the U.S. Treasury's TIC data, foreign holdings of U.S. Treasury securities decreased by approximately $72.1 billion month-on-month in June, with Japan, China, and the UK all experiencing varying declines. This is not enough evidence to prove that foreign investors are "massively fleeing U.S. bonds" because monthly holdings are influenced by exchange rates, custody locations, and asset allocation changes, and TIC data itself cannot fully identify the ultimate owners of securities, but it does indicate that the previously relatively stable overseas demand should not be taken for granted.
Foreign Holdings of U.S. Treasury Securities (June 2026)
Equally important is the buyer mix. If overseas official institutions become less willing to absorb U.S. debt, the U.S. will need to rely more on private investors. Private funds typically pay more attention to price and yield, meaning the market may require higher long-term rates to attract enough funds to absorb an increasingly large supply of bonds.
This is why simply increasing buybacks cannot solve the issue. While the Treasury can buy back some old debt, it cannot dictate at what price other investors will be willing to hold a significant amount of future U.S. long-term bonds.
The Real Divide: Is This a Liquidity Problem or a Fiscal Problem?
Proponents of expanding buybacks may argue that the Treasury is not attempting to address the fiscal deficit. Buybacks were originally a market liquidity tool, and as long as they can improve old bond trading and reduce market friction, they have achieved their policy objective. In this sense, criticizing buybacks by saying “$40 billion cannot solve the deficit” may itself blur the purpose of the policy tool.
However, the real issue raised by Nunes is: if the primary driver pushing up long-end yields has shifted from liquidity to fiscal supply, then continuing to use liquidity tools may inherently have limited effectiveness.
These two explanations correspond to two completely different market assessments. If recent long bond sell-offs are mainly due to insufficient market depth, deteriorating old bond liquidity, and short-term positioning impacts, then a Treasury buyback expansion may be sufficient to stabilize the market. But if the rise in long-term yields mainly reflects a persistent fiscal deficit, larger long-term bond supply, and higher term premiums, then buybacks can only smoothen the adjustment process, making it difficult to alter the ultimate yield level.
This is also the crux of this article: while the Treasury can improve the U.S. bond market's “trading problem,” it cannot buy its way out of the U.S.'s “fiscal problem.”
What truly needs to be observed next is not how much the Treasury's next buyback will increase, but whether long-term Treasury auctions will continue to receive sufficient demand, if the fiscal deficit will narrow, and if higher yields can once again attract foreign and private buying.
If these variables do not improve, then the yield retracement brought about by $40 billion is more likely to be a short-term cushion rather than a genuine reversal of pressure on U.S. long-term bonds.
[Original Article Link]

HYPE has surged from around $58.5 to $73.7 in the past two days, marking a 26% increase. It is now only about 4% away from its all-time high of $77.
As the price approaches a new high, Hyperliquid is also seeing positive developments.
pre-IPO Contract Enters SEC
The first piece of news comes from the Hyperliquid Policy Center. It has partnered with trade[XYZ] to submit a comment letter to the SEC in response to the regulatory body's public consultation on reforming the IPO process, proposing to include pre-listing perpetual contracts in the regulatory discussion.
The starting point of this comment letter is the traditional IPO pricing being trapped in a few underwriting institutions' bookbuilding inquiry and order allocation. According to HPC's materials, the number of listed companies on U.S. exchanges has decreased by about 40% since the mid-1990s. Companies stay in the private market longer, and retail investors often have to wait until the growth stage is nearing its end to have the opportunity to buy in. When companies are preparing for listing, underwriting banks privately collect orders, and the issuer and the public can only see the true market price after the stock opens for trading.
The final result often sees a significant disconnect between the offering price and the opening price. The issuer ends up with less money, and the institutions receiving allocations pocket the price difference.
The pre-IPO contract by Hyperliquid aims to introduce some early public trading. Traders can express both long and short views before the company goes public, and the order book continuously provides a public price. HPC and trade[XYZ] state that the contract's price near the listing is close to the stock's opening price and sometimes even more accurate than traditional media's pre-market indications.
The key move of this letter is to place Hyperliquid's pre-IPO contract within the IPO policy framework. HPC and trade[XYZ] hope that regulators will consider it as a public price discovery tool and establish rules around product categorization, derivative risk disclosure, listing eligibility, oracle and settlement transparency, deployer conflicts of interest, and staged opening to U.S. investors.
A contract product that originally only operated on the blockchain is now attempting to influence the stock issuance system.
Entropy & Traisa Join HIP-3
The second news story unfolds on the market supply side. Entropy has become a new HIP-3 deployer, planning to start in the Pre-IPO market before expanding into the stock market, with two contracts already live.
This eight-person team's background is almost entirely related to trading. Both co-founders dropped out of Stanford to start their entrepreneurial journey. The CEO was the first intern recruited by Polymarket, involved in designing the fee mechanism and liquidity incentive program, and later worked at Jump. Another co-founder previously worked on MEV on Solana before joining Ribbit Capital. Other team members come from Jane Street, Hudson River Trading, Jump, Radix, and Virtu.
These backgrounds align closely with the requirements of HIP-3. Deployers need to select assets, design contracts, maintain oracles, set leverage limits, and handle settlements. Entropy brings experience in prediction markets, on-chain trading, and traditional quant institutions, naturally raising market expectations.
The timing of Entropy's entry is also unique.
Early deployers of HIP-3 such as Felix, Dreamcash, Ventuals, have already exited. Early players tried to avoid trading [XYZ] by focusing on niche assets and first-mover advantage, only to find that listing new assets is far from sufficient. Without stable user distribution and liquidity, even the most unique trading pairs struggle to sustain.
Now, Paragon is rapidly rising. According to Loris Tools, Paragon has seen approximately $126 million in trading volume across 20 markets in the past 30 days, attracting over 3,400 traders. Also entering the scene almost at the same time as Entropy is Trasia, focusing on the Asian markets.
The competition for HIP-3 has entered its second phase.
Trump Mentions Hyperliquid Directly
The third piece of news comes from the White House. Trump mentioned at a cryptocurrency industry conference that the CFTC is working to bring Hyperliquid to the U.S. in a "fully compliant, lawful" manner.
For Hyperliquid, being directly mentioned by the President has shifted the discussion. Previously, it was challenging to fit a Perp DEX into the definition of traditional trading venues, and U.S. investors could not access related products. Now, the question has moved from "Will the U.S. handle Hyperliquid" to "How is the U.S. preparing to handle Hyperliquid."
This speech significantly alleviated the market's compliance concerns about Hyperliquid. The regulatory direction is shifting from excluding on-chain trading venues to seeking a legitimate entry for them.
A potential path is taking shape. Regulators are establishing a new market structure for on-chain trading venues to give them a legal identity distinct from the traditional designated contract market; U.S. brokers then distribute 24/7 perpetual contracts, spot, and prediction markets to more investors through HyperCore.
Druckenmiller Holds HYPE DAT
The fourth piece of news comes from institutional holdings. Stanley Druckenmiller's family office, Duquesne, revealed in its quarterly 13F filing an addition of approximately $23.2 million to its Hyperliquid Strategies / PURR position, a digital asset treasury company with HYPE as its core asset.
Druckenmiller wields significant weight in traditional financial markets. He founded Duquesne Capital in 1981, then went on to manage investments for Soros's Quantum Fund. Morgan Stanley's summary of his career record states that Duquesne achieved around a 30% annualized return from 1981 to 2010, with no losing years. Today, he manages his capital through Duquesne Family Office.
Druckenmiller's stature gives this transaction a more significant signaling effect. Hyperliquid has long been in the sights of traditional financial investors.
The market is reinterpreting Hyperliquid. The answer to decentralized finance is vying for the pricing power, distribution channels, and institutional position of the future financial market.

Translation: Peggy
Editor's Note: This week, the U.S. 30-year Treasury bond yield rose to around 5.34%, reaching a high not seen since 2007. Subsequently, U.S. Treasury Secretary Besent announced an expansion of long-term bond repurchases, increasing the maximum single repurchase size of 10–30 year bonds from $20 billion to at least $40 billion, with the arrangement to be implemented between September 9 and November 4. Following the announcement, long-term yields retreated, the dollar weakened, and risk assets received some support.
Superficially, this was not a significantly large bond liquidity operation. The more worthy discussion is: why has the U.S. long-term rate risen to a level that requires a more proactive Treasury response? And is the market beginning to reinterpret the Treasury's "policy reaction function" to long-term yields?
In "Beware the Bond," as explained by Trader Joe, the recent selloff in long bonds cannot simply be attributed to inflation. The fiscal deficit continues to create bond supply, demand from traditional long-term bond buyers like Japan has shifted, and AI capital expenditure is generating a significant supply of long-term bonds in the credit markets, with these various forces collectively increasing the scale of long-duration assets that the market needs to absorb.
The author further likens Besent's expansion of long bond repurchases to the Treasury's version of "Operation Twist." This analogy captures the direction of "reducing market long-duration supply," but the two are not equivalent: the 2011 Operation Twist involved the Fed selling short-term bonds and buying long-term bonds, explicitly aiming to lower long-term rates and ease financial conditions; the current Treasury repurchase plan's official position is still to enhance secondary market liquidity and cash management. Therefore, what is truly worth noting is not the $40 billion itself, but whether this tool will increasingly take on a role in managing long-end financial conditions in the future.
Below is the translated original text:
Earlier this week, the U.S. 30-year Treasury bond yield rose to its highest level since 2007, leading to a partial retracement in U.S. stocks and a weakening dollar.
Then, Besent made a move.
The U.S. Treasury announced that it would increase the single repurchase size of some 10–30 year long-term bonds from a maximum of $20 billion to at least $40 billion, to be carried out between September 9 and November 4. Following the announcement, the 30-year Treasury bond yield retreated from its previous high of around 5.34% to around 5.2%, the dollar weakened further, and the stock market also stabilized.
U.S. 30-Year Treasury Bond Yield
The question is: Is this just a temporary fix for bond market liquidity, or does it signal a shift in the U.S. policy stance towards long-term rates?
To understand this, we first need to answer another question: Why has the long-end yield risen to this level?
Why Has the Long-End Yield Risen to This Level? It's Not Just About Inflation
The most intuitive explanation is inflation.
If investors are concerned that future inflation will remain high for an extended period, they will naturally demand a higher long-term Treasury bond yield as compensation. However, the author believes that this alone is not enough to explain recent developments.
At least from consumer surveys, there is no clear sign of runaway long-term inflation expectations. The University of Michigan's preliminary survey in August showed that the one-year inflation expectation had risen slightly from 4.2% to 4.3%, but the five-year inflation expectation remained at 3.3%. In other words, short-term inflation concerns still exist, but the "deanchoring of long-term inflation expectations" is not the only, and arguably not the most important, explanation.
Data Source: University of Michigan Consumer Survey
The long-term Treasury bond yield reflects more than just future short-term policy rates and inflation. Economic growth, term premiums, regulatory environment, how much the Treasury needs to issue in bonds, and how much long-term Treasuries insurance companies, pension funds, and foreign investors are willing to hold all affect long-end pricing.
What is currently most notable, according to the author, is that the supply of long-term bonds is continuously increasing, but traditional demand has not expanded synchronously.
The U.S. fiscal deficit means the Treasury still needs continuous funding, and whether this funding is done through short-term Treasury bills, medium-term notes, or 30-year long bonds directly affects how much duration risk the market needs to absorb.
If the Treasury relies more on short-term T-bills for funding, it reduces the long-term bond supply that the market needs to absorb, putting relatively less pressure on long-end yields. Conversely, if more funding shifts towards 10-year, 20-year, and 30-year securities, the market must absorb more duration, potentially putting greater upward pressure on long-end yields.
This is also why the debt issuance structure itself has increasingly resembled a macro variable.
Why is the Treasury Acting Now? 5.3% Long End Beginning to Impact Financial Conditions
Short-Term Debt Can Alleviate Long-End Pressure, But Liquidity Cushion is Thinning
The issue is that even short-term debt cannot be issued infinitely.
In recent years, when the U.S. Treasury issued a large amount of T-bills, a significant source of funding was the money market funds' funds originally placed in the Federal Reserve's overnight reverse repurchase agreement (ON RRP) facility. When short-term debt yields become more attractive, these funds can flow from RRP to Treasury securities, absorbing new short-term debt without significantly draining bank reserves.
However, this cushion is now nearly depleted. Federal Reserve data shows that ON RRP usage is currently close to zero on most trading days. At the same time, as of mid-year, the U.S. banking system reserves were around $3.1 trillion.
In the second half of 2025, the massive rebuild of the U.S. Treasury General Account (TGA) further drained bank system liquidity. Federal Reserve data shows that following the resolution of the debt ceiling issue, the TGA balance increased by approximately $442.0 billion at one point, leading to a notable decline in reserves.
This was also one of the backgrounds for the Federal Reserve's end of Quantitative Tightening (QT) in late 2025.
In October 2025, the Federal Reserve announced the halt of balance sheet runoff starting from December 1 and began to engage in Reserve Management Purchases (RMP) in December, purchasing short-term U.S. Treasury securities to ensure the maintenance of ample bank reserves.
These operations can easily evoke QE visually, but the policy objectives are different.
QE typically involves purchasing long-term Treasuries or MBS, actively lowering long-term yields, easing overall financial conditions; RMP primarily buys short-term securities like Treasuries, with the official aim of maintaining sufficient bank reserves and controlling short-term rates, rather than providing macroeconomic stimulus. The Federal Reserve also emphasizes that RMP does not indicate a change in monetary policy stance.
The concern is that if the Treasury continues to increase the proportion of short-term financing to reduce long-term supply, then when liquidity buffers like RRP are nearing depletion, new short-term debt may ultimately compete more with bank reserves.
At that point, the Federal Reserve may have to conduct more reserve management operations to maintain systemic liquidity. This sets up a delicate policy mix: the Treasury minimizing duration released to the market, while the Federal Reserve ensures ample reserves at the short end.
Japan and AI are Both Transforming the Supply and Demand Structure of Long-Term Bonds
The issue on the long end has another side: who will buy?
Japan has long been a key foreign investor in U.S. Treasury bonds. The latest U.S. Treasury International Capital (TIC) data shows that as of June 2026, Japan held approximately $1.116 trillion in U.S. Treasury bonds, remaining the largest foreign holder, but down about 2.3% from May.
At the same time, Japan's own long-term government bond yields are rising.
For domestic institutions in Japan such as insurance companies, banks, and pension funds, if Japanese government bonds themselves can offer increasingly attractive yields, the marginal attraction of allocating to U.S. long-term bonds may naturally decrease, especially after taking into account the USD hedging costs.
This does not necessarily mean that Japan will continue to sell U.S. bonds on a large scale, but it does mean that a structural buyer of long-term bonds that has long existed in the past may no longer consistently absorb U.S. duration as stably as before.
Another competitor comes from AI.
The AI infrastructure build-out is transitioning from a stock market story to a credit market story. Goldman Sachs research estimates that from 2026 to date alone, the entire AI-related ecosystem has issued close to $500 billion in debt; of which the hyperscale cloud players themselves have issued around $194 billion. More importantly, it's the tenor. This year, in the U.S. investment-grade credit market, about 40% of new issuances with a tenor of 15 years or longer have come from AI firms or AI-related financing.
This means that traditional long-duration funds such as pension funds and insurance companies are facing more choices. They are no longer just comparing 30-year U.S. Treasury bonds and other sovereign debt, but can also purchase long-term investment-grade bonds of large tech companies like Amazon, Google, and AI-related credit assets such as data centers and infrastructure.
From the author's perspective, this makes the core issue facing U.S. long-term bonds even clearer: the Treasury needs to sell more and more debt, while the other long-term assets that global markets need investors to absorb are rapidly increasing.
Treasury's Version of Operation Twist: $4 Billion Is Not Huge, but the Real Change Lies in the Policy Response
It is also in this context that the Bizarro expands its long-term bond buybacks.
The U.S. Treasury's regular buyback program began in 2024, with the official setting two purposes: to improve secondary market liquidity and for cash management.
Notably, the liquidity support repo primarily purchases older, less liquid securities, known as off-the-run Treasuries. The Treasury Department proactively positions itself as a potential buyer of these bonds, aiming to assist dealers in depleting inventories and enhancing the trading dynamics of these older securities. (U.S. Department of the Treasury)
Therefore, from a structural perspective, this is not a QE tool designed to cap the 30-year yield.
Moreover, a one-time purchase of at least $40 billion in the vast $30 trillion U.S. Treasury market remains relatively small. Reuters also notes that the market widely believes this scale is insufficient to address structural issues such as the fiscal deficit and long-term supply expansion.
However, the author's true focus is not on the scale but on the policy intent.
In the past, the Treasury could emphasize that repos were merely market liquidity tools; now, as the 30-year yield rapidly approaches a two-decade high, the Treasury swiftly expands long-dated bond repos, prompting market participants to question: if the long end continues to spiral out of control, will the Treasury further adjust its repo and issuance structures in the future?
This is why the author refers to the current policy as the Treasury's version of "Operation Twist."
Note: Operation Twist is often referred to as "扭曲操作" or "期限延长操作" in Chinese. Its essence is not "printing more money" but adjusting the central bank's bond maturity structure: selling short-term bonds, buying long-term bonds to depress long-term rates.
The classic 2011 Operation Twist was conducted by the Federal Reserve: selling or letting short-term bonds mature while simultaneously purchasing an equivalent amount of 6-30 year bonds, elongating the asset portfolio duration without expanding the balance sheet, reducing the private sector's holdings of long-term bonds, and lowering long-term rates.
What is happening today is not an exact replica of the same operation. The Treasury is not executing a strict "sell short, buy long" like the Fed did back then, and the expanded repos are still officially defined as debt management and liquidity tools. However, from a market duration supply standpoint, both are somewhat aligned: if the Treasury continues to repurchase more long-term old bonds while leaving more net financing pressure on the short end, the net duration that the private market needs to absorb may relatively decrease.
This is what the author refers to as the "Treasury's version of Operation Twist." More precisely, it is currently a market interpretation rather than an established new policy framework.
Can This Approach Anchor the Long End? Risks May Shift to the Dollar and Inflation
So, under what circumstances would this policy framework continue to escalate? The author argues that instead of looking for an absolute 30-year yield "red line," it is better to observe the speed of the yield increase. A 30-year yield at 5.2% or 5.3% may not be sufficient on its own to trigger a policy change; but if the market begins to see consecutive rapid jumps of around 10 basis points each time, indicating a significant deterioration in market liquidity and demand, the probability of further intervention by the Treasury Department or the Federal Reserve would increase.
Meanwhile, long-dated bond yields have become more directly competitive for funds with equities. As per the data available when the author's article was published, the nominal yield on 30-year U.S. Treasuries is around 5.2%, while the real yield on long-term TIPS is close to 3%; in comparison, the S&P 500 earnings yield is around 3.8%.
While these cannot be directly compared — the earnings yield is not a risk-free rate, and corporate earnings are expected to grow or decline in the future — when the risk-free long-term real yield rises to such a high level, it is evident that the opportunity cost that stock valuations must bear is increasing.
Therefore, the key significance of Bostic's recent move may not be in temporarily pulling the 30-year yield back from above 5.3% to around 5.2%.
It lies in the market getting a new sample of observation: when U.S. long-end yields rise rapidly, will the Treasury Department become increasingly proactive in responding through repurchase sizes and debt maturity structures?
If the answer gradually shifts to "yes," then in the future, the impact on the U.S. dollar, U.S. stocks, gold, and long-term government bonds will involve not just the Fed's policy reaction function but also this additional layer of the Treasury Department.
However, this logic also has its boundaries. If the rise in long-dated yields is primarily due to a bond supply-demand imbalance, reducing the duration that the market needs to absorb may alleviate the pressure; if inflation expectations notably rise again, continuing to expand repurchases, increasing short-term debt financing may instead make market participants concerned that policies are artificially suppressing financial conditions.
Therefore, what truly needs to be observed next is not just whether the Treasury Department will increase repurchases but whether inflation expectations, the structure of long-term bond issuances, overseas demand, and the speed of long-end yield fluctuations are all changing simultaneously.
Only when these variables continue to point in the same direction will the author's proposition that the "Treasury Department is taking over a part of long-end financial conditions management" receive further validation.
[Original Article Link]

Translation: Peggy
Editor's Note: On August 19, the U.S. Treasury Department announced an expansion of long-term bond repurchases, increasing the size of the single-day liquidity support repurchase for some 10–30 year bonds from $20 billion to at least $40 billion. Previously, the 30-year Treasury yield had briefly risen to 5.337%, reaching a new high since 2007; after the news was released, the long-term yield swiftly retreated.
The market immediately began to wonder: Is the Treasury Department showing a more explicit policy sensitivity to the rapid rise in long-term rates?
In his publication on August 20 titled "Hot Take: Bessent Makes His Mark," Stephen Innes discussed precisely this issue. He focused not on the $40 billion repurchase itself but on how this move could change the market's understanding of the U.S. policy "reaction function": when long-term yields rise high enough and fast enough, will the Treasury Department take action again and transition from a mere debt manager to another hand influencing financial conditions?
This development is significant because the policy constraints in the U.S. are increasingly concentrated at the long end. The Fed can directly determine short-term rates but cannot completely control term premia, fiscal supply, and the 30-year Treasury yield. If the Treasury Department starts more actively managing long-end market pressures, the framework of only focusing on the Fed to judge financial conditions will become incomplete.
Innes' key insight is not that the U.S. has entered yield curve control but that the market is starting to realize that Washington may have an undisclosed "policy pain threshold." Once traders believe that a certain yield level will trigger Treasury action, the pricing of future long-term rates will no longer depend solely on inflation, the Fed, and bond supply and demand but will also add a new variable: how high the Treasury Department can tolerate long-term yields rising.
Below is the translation of the original text:
U.S. Treasury Secretary Scott Bessent's latest move has added a new trading variable to the long-term U.S. bond market.
On August 19, the U.S. Treasury Department announced that it would at least double the size of the liquidity support repurchase for certain long-term nominal bonds. The single repurchase limit for 10–20-year and 20–30-year bond maturities will be increased from the current $20 billion to at least $40 billion. The new arrangement will take effect on September 9 and continue until the end of the current quarter's refinancing period on November 4. The Treasury Department's official explanation is to provide more liquidity support for long-term bond maturities.
In terms of scale, this is not a large enough operation to change the overall supply-demand dynamics of the U.S. Treasury market. The U.S. Treasury's bond repurchase mechanism itself is not QE: the Treasury mainly repurchases older, less liquid outstanding bonds to improve market liquidity, rather than injecting base money into the financial system through expanding the central bank's balance sheet as the Fed does with QE.
However, in the view of the author Stephen Innes, what the market is truly trading is not the $40 billion number, but the policy signal behind it.
Limited in Scale, Market Trades First and Foremost on "Why Now"
After the Treasury's announcement, long-term U.S. bond yields quickly fell.
On August 19, the 30-year U.S. bond yield briefly dropped by nearly 10 basis points to 5.187%. The day before, the yield had touched 5.337%, the highest level since 2007. At the same time, the long-end of the yield curve flattened, the U.S. dollar weakened significantly, gold broke $4,500 per ounce, Bitcoin rose, and the three major U.S. stock indexes all closed slightly higher.
These market changes coincided with the Treasury's announcement. However, a more accurate statement is: the market's expectations of the Treasury's policy response changed, rather than the Treasury directly lowering yields on that day by adding repurchase funds.
This is because the expanded repurchase size will not take effect until September 9. Therefore, what is most worthy of attention this time is the "signaling effect."
The author of this article points out that the Treasury could have announced this adjustment during the previous quarter's refunding arrangement, but did not do so at that time. Following that, there was a noticeable sell-off in long-term U.S. Treasury bonds over two weeks, pushing the 30-year yield to nearly a 19-year high before the Treasury separately announced the increase in the repurchase size.
The Treasury did not indicate that this adjustment was aimed at supporting a specific yield level; the official reason remains to enhance liquidity for long-term securities. However, in the author's view, traders will naturally wonder: if long-term yields rise rapidly again in the future, will the Treasury further adjust its policy?
This is precisely what he calls the "Bessent Makes His Mark" core.
From Yen Intervention to Expanded Repurchase, Market Begins to Test Treasury's "Threshold for Action"
This speculation arose quickly also because this was not the first recent event where the U.S. Treasury clearly intervened in market operations.
From late July to early August, the U.S. and Japan made a rare coordinated intervention in the foreign exchange market to support the yen. Less than a month later, the Treasury Department announced an expansion of long-term bond repurchases after long-term bond yields rose to multi-year highs. The two actions targeted different markets, and their policy objectives cannot be simply equated: the former directly addressed exchange rate volatility, while the latter was officially positioned as liquidity management in the government bond market.
However, Innes believes that they collectively influenced investors' assessment of the Treasury Department's reaction function — the market began to speculate on how much and how quickly the Treasury Department might act once asset prices experienced significant fluctuations.
This is also the essence of the so-called "Bessent Put." It is not a formal policy, nor does it mean that the Treasury Department has committed to buying bonds at a certain yield level, nor is it equivalent to Yield Curve Control (YCC).
More precisely, this is a market inference: if traders start to believe that the Treasury Department has an intolerable "pain threshold," whenever the 30-year yield approaches a high point in the future, the market may speculate on whether the policy will be adjusted again.
In other words, the market is looking for the Treasury Department's "intervention threshold": at what level will the long-term bond yield rise to prompt Washington to take action again?
The first intervention informed the market that the Treasury Department is monitoring pressure in the long end of the market. Only if similar actions are taken in the future, the market may further assess whether the Treasury Department truly has a relatively clear policy trigger range.
Whether the "Fed Put" is transitioning to the "Bessent Put" remains the author's judgment
Innes further discussed this change within the framework of the Federal Reserve under Kevin Warsh's leadership.
His assessment is that the Federal Reserve under Warsh aimed to reduce market reliance on central bank-induced suppression of volatility and allow more price discovery to return to the market itself. Therefore, if the Treasury Department becomes more willing to take action in case of sharp fluctuations in bonds or exchange rates, the familiar "Fed Put" from the past may not completely disappear but could show signs of shifting towards the Treasury Department.
It is important to make a clear distinction between facts and judgments.
The confirmed facts are: the Treasury Department recently participated in U.S.-Japan coordinated exchange rate intervention and announced an increase in the scale of long-term bond repurchases; the Federal Reserve still independently manages monetary policy. As for the idea that "policy support is shifting from the Federal Reserve to the Treasury Department," this is Innes' interpretation based on these two market operations and is not a new policy framework announced by the U.S. government.
Similarly, there is currently no evidence that the Treasury Department is implementing yield curve control. In fact, the scale of long-term Treasury bond buybacks remains small. A one-time $40 billion operation is limited compared to the over $30 trillion U.S. Treasury market, and buybacks have not addressed structural issues such as the fiscal deficit, inflation expectations, and long-term bond supply and demand that have led to rising yields.
Therefore, the "Bessent Put" is currently better suited as a concept to describe market expectations rather than an established policy tool.
Fed Still Discussing Rate Hike, Treasury Signals Adding Complexity to Trading Framework
Meanwhile, the signals from the Fed are not distinctly dovish.
The FOMC meeting minutes from July 28 to 29 showed that most members supported keeping the federal funds target rate at 3.50% to 3.75%, but "several" members were inclined to a 25-basis-point rate hike at the next meeting. The minutes also indicated that many members believed that further monetary policy tightening might be necessary if inflation did not continue to decline; ultimately, three members voted against keeping the rate unchanged and favored a 25-basis-point hike.
However, these minutes reflect the policy assessment at the end of July. Subsequently released inflation and employment data have been relatively moderate, leading the market to lower expectations of further rate hikes. This has made the current policy outlook more complex.
On the one hand, there are still voices within the Fed advocating for further monetary policy tightening; on the other hand, the Treasury Department's announcement of increasing long-term bond buybacks has prompted the market to reassess the upside potential of long-term yields, accompanied by a decline in yields and the U.S. dollar.
Innes therefore believes that simply trading U.S. financial conditions around "the next Fed rate hike or cut" may no longer be sufficient.
It is important to emphasize that the Treasury Department's announcement of expanding buybacks does not directly equate to monetary easing. A more accurate statement is that following the announcement, the decline in long-term yields and weakening of the U.S. dollar have had a certain marginal easing effect on financial conditions from a market pricing perspective; whether this effect can be sustained still depends on subsequent inflation, fiscal supply, and market demand.
This is the real issue to watch in the near future.
The Treasury Department has clearly stated that this increase in buybacks will only last until November 4 and will provide further information on future arrangements at the next quarterly refunding meeting. Therefore, for the long-term U.S. bond market, the key is no longer just the next set of inflation data or the next FOMC meeting.
The market is now also watching another variable that has not been so prominent before: if the 30-year Treasury bond yield approaches 5.3% again or even higher, will the Treasury Department adjust its tools again? In other words, what the market is currently testing is: how high does the long-term Treasury bond yield need to rise to trigger the Treasury Department's next move?
Currently, this is still a hypothesis that traders are testing, rather than a yield threshold that has received policy confirmation.
[Original Article Link]

According to PolyBeats News, on August 19th, Beijing time, an individual managed to achieve a 120% return in just 89 seconds by predicting "whether Russia would be able to occupy a certain area in the battlefield."
This individual invested $4,000 to purchase the prediction "Russia will capture Konstantinovka this month" on a platform called a prediction market. The probability of this event happening was only 43% at the time. 89 seconds later, this probability increased to 92%.
In this probability-price platform, if the event does occur, the probability will be locked at 100%, and the position value will increase accordingly. The mysterious individual placed the order, witnessed a sudden surge, and then exited at the take-profit in less than two minutes. In an era where various trading strategies abound, such stroke of luck in trading is not uncommon.
What makes this individual suspicious is that Konstantinovka was his 14th such operation.
14 Consecutive Successful Battlefield Predictions
Analysis of the account's transaction records by PolyBeats revealed that this individual's account had a total of 14 correct prediction trades related to the Russia-Ukraine conflict, realizing a total profit of approximately $17,500.
These predictions did not pertain to the same city or the same timeframe: from Maliyevka, Pokrovka, to Huliaipole, and Konstantinovka; some were about "whether Russia will capture," while others were about "whether Ukraine will re-enter." However, the operations were nearly identical as if copied from the same template.
Even more bizarrely, not only did this account accurately predict the outcome 14 times, but 11 of these trades saw the probability surge to nearly 100% within 5 minutes after the purchase.
It is difficult to consecutively guess the battlefield developments correctly 14 times and buy in before the market probability escalates. However, if the advance knowledge was not of the battlefield but of the map update time, the scenario becomes much simpler.
Prediction Markets: Breeding Ground for Insiders
All of Polymarket's Russian-Ukraine occupation market titles are almost a template:
“Will Russia take over a certain region by ___?”
While the question may seem straightforward, what truly determines the answer is not when the gunfire starts.
According to Polymarket's rules, only when the Russia-Ukraine battleground map produced by ISW—the Institute for the Study of War—labels a specific region as Russian-controlled and meets the duration requirements set by the rules, will the market move to a "Yes" outcome—corresponding to a 100% settlement probability.
In other words, even a soldier standing in the occupied territory cannot insider trade to stable long-term gains in such a market: even if the occupation indeed happens, as long as ISW, the source of settlement, does not update the map, this market will settle as "No."
In such a market, only one type of person can achieve perfect profitability like the aforementioned account: he doesn't need to know the frontline situation, understand Russo-Ukrainian geopolitics and military strategy, or even follow any international current events. He only needs to know in advance which area ISW is ready to mark as Russian-controlled, and when that update will take effect.
This group of people is the technical staff responsible for updating the battlefield status at ISW. They only need to predict the corresponding market long positions to buy into right before clicking the mouse to confirm the ISW map update, enabling them to make a substantial profit within a minute.
Sound like a conspiracy theory? Last year, ISW had already experienced a similar farce.
Employee Manipulates Open-Source Intelligence Data for Massive Profits
In November 2025, the prediction market had already previewed how this mechanism would spiral out of control.
At that time, the market question was, “Will Russia take over Mironohrad before November 15?” The rules were almost identical to the above—only when the ISW map shows any part of the Russian military controlling a specified street intersection, the outcome could be determined as “Yes.”
The most significant difference from the current rules was that there was no "waiting period" back then: as soon as the map changed, the market settlement condition could be met.
On the evening of the 15th, the probability of "Yes" was less than 3% as there were only a few hours left until the deadline—without any geopolitical news reporting the occupation of Mironohrad, everyone had already assumed that this market would ultimately settle as "No."
However, at this moment, the ISW map suddenly showed the area as occupied; before most people could even react, the probability of "yes" was instantly pushed to 100%.
Over the next few days, as traders questioned the lack of concrete evidence for this map marking, ISW publicly admitted that there had been an "unauthorized, unapproved" edit on the interactive map during the night of November 15 to 16; this edit was removed before the start of the normal workflow on the 16th and did not represent its official battlefield assessment.
The map was retracted, but the market did not retract, and those accounts that predicted "yes" when the probability was approaching zero profited greatly from this "unauthorized edit." Among them, 0x69A9 bought in when the probability was only 0.9% and ultimately achieved a 10,888.68% excess return.
Following the Mironohrad incident, ISW stated that its map would continue to be modified during workdays and should not be understood as real-time battlefield conditions; it later added "being edited" and "finalized" status indicators. Prediction markets later also implemented stricter persistence requirements: the map status had to span the next full update cycle to be used as a settlement basis.
As of now, the mastermind behind these 14 consecutive victories has not publicly revealed their identity and has not been accused by any institution; ISW has also not acknowledged any employees benefiting from map update arbitrage.
But the timeline of the 14 victories is clear: almost every time, it placed bets on a city considered "undetermined" by the market; almost every time, it waited until the market was close to certainty before selling; almost every time, it pocketed the difference between "no one knows yet" and "everyone knows."
In the past, a regular ISW employee responsible for updating the map might have been just a nameless screw in a vast open-source intelligence system. What he held in his hands was just a mark about to change color, an update about to be released, and a few seconds before the click of confirmation.
These pieces of information were originally untradeable, and few would have cared.
But when a map can determine the final market settlement, those few seconds before clicking the mouse now have a price. A person doesn't need to disclose top-secret military intelligence, manipulate the battlefield, or even change any facts; all he needs is to know about a mark that is about to appear before everyone else, turning the authority assigned to his position into profits close to certainty.
Innovation has opened a market for everyone to predict the future, but it has also opened another door: when the settlement source can be seen in advance, modified in advance, or traded in advance, you and I can all become insiders.

Emails, chat records, project documents, work orders—these used to be just digital remnants awaiting clean-up after a company shut down. Now, they are being reassessed, packaged, sold, and fed into an AI company's training pipeline.
An undertaker preserves the deceased's final dignity. The postmortem dignity of an enterprise is to prove that what they left behind still holds value.
On August 17, at a bankruptcy asset auction, Google bid $10 million to acquire all of Spirit Airlines' corporate data. Another bidder, Mercor, bid $7.5 million, falling short by $2.5 million.
The auctioned items were divided into three parts. The first part consisted of approximately 100 million employee emails. The second part included 500 million Microsoft Teams messages, totaling 600 million. The third part comprised calendars, spreadsheets, financial databases, project files, operational records, and a batch of internal software. Passenger profiles, frequent flyer information, and the like were not included.
600 million messages—if one person speaks 100 sentences a day, they would have to speak non-stop for over 16,000 years.
Calculating, each message was sold for 1.67 cents. Americans refer to a 1-cent coin as a penny, often not bothering to pick it up if it falls on the ground. In other words, a Spirit employee's sentence in Teams was worth one and a half pennies.
Going back to 1980, Spirit Airlines was born in Detroit, born from a trucking company called Charter One, which later transitioned to aviation. In 1992, it was renamed Spirit, meaning soul. Over the following 34 years, it set the benchmark for the entire industry to replicate the model of ultra-low-cost carriers in the U.S.
It once had a solid foundation—205 all-Airbus fleet, approximately 300 flights a day, and a projected 2024 revenue of around $5 billion. However, it faced a net loss of about $1.2 billion and carried nearly $9 billion in debt when it filed for bankruptcy.
On a late night in May 2026, the company announced it was ceasing operations. The next day, around 17,000 employees found out they were unemployed through the news.
Proceedings are still ongoing, and the transactions are awaiting approval from the bankruptcy court. Spirit is undergoing a liquidation-type closure under Chapter 11 bankruptcy, with no bankruptcy trustee taking over. The company is still supervised by the court and is selling off its remaining assets piece by piece. The sensitive data involving employee emails, Teams messages, etc., must first be handed over to an independent entity for processing. This entity was selected by Google, with Google also bearing the costs.
Furthermore, scouring through public reports, the bankrupt company selling internal data to an AI company is unprecedented. This deal is most likely the first of its kind in history.
The long-standing U.S. tech publication Gizmodo titled this transaction as follows: "Spirit is Dead, But Its Data Will Haunt Google's Servers for Generations."
A New Business Venture
There have always been people who handle the assets of defunct companies. Lawyers, liquidators, auction houses—doing this for decades. Aircraft, furniture, trademarks, patents—all sellable assets have long been sold off.
What's truly new is that starting this year, even a company's internal employee data has been put on the table.
This emerging business has two underlying reasons.
First, the number of defunct companies has increased.
In the first quarter of 2024, the failure rate of U.S. startups surged by 58% year-on-year, and the number of active VC firms decreased by 62% from its peak. The money hasn't decreased; it's just flowing more concentratedly towards AI. In 2024, U.S. AI startups raised a record $97 billion in funding. The capital market still has money, but it's becoming more reluctant to spend outside of AI.
As a result, a group of companies that could have continued to survive on funding are now hitting a wall earlier. In August 2024, the fintech company Tally, backed by a16z, announced its closure. Having raised a total of $172 million, with a peak valuation of $855 million, reaching Series D, it still couldn't secure the next round of funding.
Second, data has become more expensive.
The consumption of data for large-scale model training has reached unprecedented levels. The training data for GPT-4 consists of around 130 trillion tokens. For comparison, Google Books scanned over 40 million books in over forty years, which amounts to about 40 trillion tokens. In other words, the amount of data used for one GPT-4 training is equivalent to over three times the content of Google Books.
Epoch AI ran some numbers and concluded that high-quality language data from books, news, and Wikis will be depleted around 2026. The high-quality text available on the public internet is quickly running out, with synthetic data accounting for an increasing share. Next, AI companies will have to look beyond the public internet for new data. Years-worth of internal company emails, chat records, and work documents have now come into view.
As for the AI training dataset market, research institutions predict it could reach $9.7 billion by 2030. Taking into account various licenses, the total size of the pie is estimated to reach $67.5 billion.
On one side, more and more companies are closing down, leaving behind a large amount of internally generated data that was previously not priced; on the other side, AI companies have an increasing demand for data beyond the public internet. With both sides happening simultaneously, it is the first time that internal corporate data has the conditions for scalable transactions.
What truly adds value to this type of data is the development of Enterprise Agents. Gartner predicts that by 2026, 40% of enterprise applications will embed task-specific AI Agents, a figure that was less than 5% the previous year.
The training material required for Enterprise Agents is not exactly the same as that for large-scale models. While public web pages can provide knowledge, language, and final content, it is challenging to replicate a company's actual work processes. Communication and collaboration involve many real details, such as how a requirement is proposed, how several people discuss it, how tasks are assigned, how issues are addressed, and ultimately how delivery is made.
These processes are extensively recorded in a company's internal emails, chat logs, tickets, and project documents.
When such data begins to have clear buyers and use cases, things that were previously directly deleted when a company shut down now have standalone transaction value.
Body Snatcher
In the past, this job was done by liquidation lawyers, but now three new types of people have emerged.
The first is called a dissolution service provider, represented by SimpleClosure.
This company does only one thing: helping startups die gracefully. In 2023, the company just started, raising $1.5 million in pre-seed funding, and in May 2025, it secured $15 million in Series A funding, led by TTV Capital. Even Carta, which handles equity management and corporate affairs for many US startups, shut down its own closure service, invested in SimpleClosure, and handed over this part of customer demand to it.
By October 2025, SimpleClosure had already conducted funerals for over a thousand companies. Crunchbase gave it a nickname, "A Better Way To Fail," a kind of better way of failing. While American entrepreneurs love to say "fail fast," SimpleClosure argues that fast failure is not enough; it must also be dignified. The company even has a pricing calculator on its website – enter your company's situation, and it will calculate how much it costs to die once.
A funeral is never a waste. In April 2026, SimpleClosure launched the Asset Hub, specifically designed to handle intangible assets left behind after a company shuts down. In addition to brands, software, and customer lists, for the first time, items such as Slack messages, emails, and Jira tickets – internal work data – were explicitly put on the shelf.
This indicates that before Spirit, the market had already begun to attempt to price the internal data of dead companies, although at that time it was still startups, small transactions, and private dealings.
There is a ready-made case. When transcription and captioning company cielo24 shut down, they sold off Slack messages, internal emails, and Jira tickets accumulated over the past 13 years through SimpleClosure. CEO Shanna Johnson later told Forbes that this batch of data eventually sold for hundreds of thousands of dollars.
For a company that has already decided to close its doors, this was originally a batch of data that needed to be cleaned up, but in the end, it became an asset that could be recovered during liquidation.
For the data sales stage, SimpleClosure handed it over to Protege. This is a data exchange market specializing in AI training data licensing. In January 2026, they just received a $30 million investment led by a16z, and the founder is Bobby Samuels. Protege's initial entry point was medical imaging, where within 30 days, they gathered millions of images for pre-training for buyers.
Now, Protege is starting to apply this data licensing and trading ability to internal communication data of closing companies. SimpleClosure is responsible for company closure and asset organization, while Protege is responsible for finding buyers, completing data licensing, and transactions.
The second type of participant is bankruptcy courts and liquidation lawyers. For decades, they have been counting planes, tables, chairs, trademarks, and patents. Now, the list is beginning to include emails, Slack messages, and other internal data.
According to U.S. bankruptcy law, this data can be included as intangible assets in bankruptcy estates and sold under court supervision. Relevant law firms have also begun to establish specialized teams to handle data preservation, discovery, and organization in bankruptcy cases. Redgrave LLP has such a restructuring and discovery business.
The third type is e-discovery service providers responsible for technical execution. Companies like KLDiscovery, Epiq, and Consilio are usually involved in collecting, organizing, hosting, and reviewing enterprise data. The content in emails, Teams, and SharePoint needs to be exported, archived, and organized by them before being packaged into data that can enter the transaction process.
This industry itself already has a mature set of billing methods. EDRM regularly publishes pricing surveys, with common billing units including data collection per GB, hosting per GB per month, and document review fees.
Spirit’s 600 million messages eventually turned into an auction item, relying on this type of foundational work. However, compared to court documents and auction bids, this part rarely appears in public reports. The specifics of who handles it and how it is handled are usually not visible to the outside world.
Autopsy Checklist
For a corporate Agent, what it needs to learn is not just knowledge and standard answers, but also judgment, collaboration, error correction, and execution processes in the real work environment.
The final product tells the model what it has become, while internal records tell it how it was made.
This change has already been reflected in Agent training data. In the past, a single-line of code training sample might only consist of a few hundred tokens, involving modifying a few lines of code; now, an Agent training sample often needs to include the entire process of requirement understanding, file locating, code modification, and test verification.
Training data is transitioning from a single answer to full task execution records. For the Agent, the end result is of course important, but the judgments, operations, and feedback left during task completion are more valuable for training.
Compared to companies operating normally, the data of a shutting-down business is more likely to enter the transaction process. While the company is still operating, selling internal communications would involve trade secrets, employee privacy, non-compete risks, and customer relationships, and legal and management teams are usually very cautious. After entering liquidation, the company's main goal changes to recovering as many remaining assets as possible to secure more value for creditors.
That's why the same batch of internal data, which was difficult to sell while the company was alive, may be revalued during the shutdown phase.
The value of internal corporate data has long been recognized by the industry. Salesforce has always regarded the enterprise communications accumulated in Slack as important data assets, and Microsoft CEO Satya Nadella has emphasized multiple times that when enterprises use AI, a truly valuable part is their proprietary data and work context.
In the past, this data primarily served the company itself. Now, as AI companies begin to actively seek enterprise internal data, they have, for the first time, more clearly defined external buyers.
The Art of Pricing
While this business is still in its early stages, some reference prices have emerged in the market.
SimpleClosure and Protege handle data from closing startups, with individual transactions typically ranging from $10,000 to $100,000. Mercor offers quotes based on the chat logs and emails of acquired startup employees, with the highest reaching $300,000.
Spirit has taken the pricing to the tens of millions of dollars. Mercor bid $7.5 million, and Google ultimately offered $10 million, competing for around 600 million internal communications and other corporate data. Based solely on these 600 million messages, the average price per message is approximately 1.67 cents.
This unit price is not high. In 2024, Reuters reported that Photobucket negotiated licensing deals for about 13 billion photos and videos with an AI company, with prices around 5 cents to $1 per photo and over $1 per video. In the B2B data market, a single contact's information can be sold for a few cents to a few dollars depending on completeness and accuracy.
However, these prices are not yet enough to form a unified standard. The value of internal data from closing companies is currently mainly a matter of individual negotiation. Factors such as data volume, industry, time span, completeness, uniqueness, and what the buyer intends to do with it will all affect the final price. Spirit's $10 million bid appears more like one of the few publicly visible large-scale examples at present.
When compared to established data licensing markets, the gap becomes even more apparent. Reddit licensed user posts and comments to Google for approximately $60 million annually; News Corp's content licensing agreement with OpenAI is around $250 million for five years; xAI's partnership with Telegram amounts to $300 million; and Apple's purchase of Shutterstock image licenses falls between $25 million and $50 million.
These markets already have established buyers, licensing mechanisms, and pricing experiences. Transactions of internal data from closing companies are just getting started, with no clear rules yet on which data is most valuable or whether valuation should be done per item, by capacity, or as a whole.
Looking at Spirit's $10 million within the company's own scale is a different story. In 2024, Spirit's annual revenue was close to $5 billion, averaging around $13.7 million per day. The amount Google spent to acquire this data is less than what it makes in a day during normal operations.
For a bankruptcy liquidation, this is just a small recovery from the remaining assets; for an AI company, it is acquiring a set of long-unseen data containing the real operational processes of the business.
Cleansing and Handover
After the data transaction, it cannot be handed over directly to the buyer. Before the formal handover, it usually needs to go through several steps such as export, de-identification, organizing and packaging, court approval, and final delivery.
The first step is export. Slack's corporate data is usually exported as a ZIP file, including JSON files organized by channel, member information, and attachments.
Microsoft 365, on the other hand, can export emails and Teams messages through an eDiscovery tool. The Spirit transaction involves approximately 600 million internal communications, a large amount of data that requires processing in batches in practice. The specifics of whether this is carried out by an eDiscovery service provider or the buyer's engineering team have not been disclosed in publicly available documents.
Next is de-identification, which involves removing as much information as possible that can be traced back to specific employees. Common methods include identifying and masking personal information such as names, phone numbers, and addresses, or replacing sensitive fields with identifiers that do not directly correspond to individuals. In some statistical and training scenarios, additional random perturbation is applied to further reduce the possibility of re-identifying individuals.
However, de-identification does not equate to absolute anonymity. Even if names and emails have been removed, as long as there are enough professional, temporal, locational, or behavioral features retained in the text, there is still a possibility of re-identifying individuals through other information.
Therefore, the party responsible for this step in the Spirit transaction is crucial. According to the current transaction arrangement, a third-party independent entity will handle the de-identification process, chosen by Google and at Google's expense. Google has also committed not to exploit this dataset to re-identify individuals.
Data sales by bankrupt companies are not unprecedented. Over the past two decades, from Toysmart and Borders to RadioShack and 23andMe, cases have emerged involving the handling or sale of customer data during bankruptcy. Transactions of this nature involving consumer privacy usually face stricter scrutiny from courts, regulatory bodies, and state governments.
What sets Spirit apart is that this sale does not revolve around passenger lists but rather around employee emails, Teams messages, and other internal work data. Existing bankruptcy procedures have not established mature rules for dealing with this type of data as they have for consumer information.
Controversy has already arisen. Spirit's flight attendants union has raised objections to the transaction, leading the court to postpone approval. What was initially a batch of corporate data intended to be sold as bankruptcy assets has now become entangled in employee rights and the boundaries of AI usage.
If the transaction is ultimately approved, the data will enter the final settlement stage. However, there is little public disclosure about the data's journey from the finalized dataset to Google's systems. It is currently unknown how the data is transmitted, whether further cleansing will occur, and in what form it will ultimately enter product development or model training.
At this point, the program truly completes the transformation of data from bankruptcy assets to AI assets.
Buyer
The most clear-cut buyers of this type of data at present are model companies like Google and training data service providers like Mercor.
Google's official statement regarding this Spirit transaction is that the data will be used for product improvement and AI development. For Google, the value of this dataset lies in its documentation of a large enterprise's real operational processes, such as scheduling, collaboration, internal communication, project advancement, issue resolution, and management decisions.
These details are hard to obtain from public web pages. Particularly for corporate agents, beyond just the final outcome, what is more important is how tasks are progressed and completed within a real organization. The internal records left by Spirit happen to contain a significant amount of such process data.
Another bidder, Mercor, provides further insight into where this business is heading.
Founded in 2023, Mercor's three founders—Brendan Foody, Adarsh Hiremath, and Surya Midha—have been debate team partners since high school. The company initially focused on AI recruitment, using models to help companies screen and interview candidates. By September 2024, Mercor had evaluated around 300,000 job seekers, reaching a valuation of $250 million.
Subsequently, the company's focus shifted towards AI training data. In November 2025, when the three founders were only 22 years old, as the company's valuation rose, they became some of the youngest self-made billionaires globally. In the first half of 2026, Mercor's revenue exceeded $614 million, with about 90% coming from top AI labs like OpenAI. By July, the company was seeking a valuation of around $20 billion and had acquired Deeptune, a company specialized in building training environments for AI agents.
Mercor primarily acquires training data through two main paths.
One is by directly purchasing internal company records. They have made offers to acquired or closed-down startups to buy employee chat logs and emails, with individual companies receiving offers of up to around $300,000.
Another one is hiring people with real work experience. In October 2025, TechCrunch reported that an AI lab recruited former employees through Mercor, allowing them to convert their work experience into training tasks and feedback at an hourly rate of about $200. The CEO of Mercor stated that the company pays out over $1.5 million daily to individuals participating in AI training.
On one side, acquiring the company's retained work records, and on the other, acquiring the work experience held by employees. Mercor's core assets are essentially work processes from the real world.
This also explains why it appeared at Spirit's auction. For Mercor, 6 billion pieces of internal communication were another, larger-scale source of training data.
This type of business also comes with risks. In 2025, Scale AI sued Mercor, alleging that former employees took trade secrets; subsequently, the company experienced training-related information leaks and partnership suspensions. Data is both Mercor's business and its most critical asset to defend.
Lastly, there is a numerical contrast. Spirit operated under this name for 34 years, while Mercor, bidding on its internal data, had three founders who were only 22 years old at the time.
Broken Bench
The transaction for Spirit is not yet finalized, the court has not signed off, and Google has not acquired that set of data. There are still union objections, hearings, and many procedures to go through.
But this auction has already made something that was seldom discussed before more concrete.
In the past, when a company closed, many things did indeed disappear. Financial statements remained, trademarks remained, patents remained. However, a company's day-to-day experience usually did not. How a department conducts meetings, how a manager makes decisions, how dozens of people coordinate after a delay, why a process eventually changed to its current state – these things are rarely formally documented.
As a company dissolves, people leave, email addresses deactivate, chat groups close – they also disappear.
So, a company has always been a peculiar organization.
It can exist for decades, accumulating the experiences of tens of thousands of people, but what can truly be inherited is often only a very thin slice of it. The next company will have to hire again, make mistakes again, and learn many things all over again.
The potential AI is changing is exactly this. If emails, meetings, tickets, code changes, and internal discussions can truly be organized into training data, then a company's past experiences that could only be passed down by talent have, for the first time, found another way to be preserved.
Where this will ultimately lead is still difficult to determine. Perhaps in the future, companies will proactively save this data, perhaps employee contracts will be rewritten, perhaps bankruptcy laws will add new restrictions, perhaps companies will separately value even internal work records during financing and M&A.
Spirit has raised this issue early.
The word bankruptcy has a widely circulated etymology. Medieval Italian merchants conducted business sitting behind a bench. When their debts exceeded their assets, the bench was publicly destroyed. banca rotta, broken bench.
For centuries, when the bench broke, it was all over.
Spirit's bench has already broken. The 600 million messages it left behind are being repriced.
One message at one and a half pennies.
Original Article Link

Can someone who once helped Soros break the Bank of England now use the same tactics to defend the U.S. Treasury market?
Since the beginning of this year, U.S. Treasury Secretary Scott Bessent has made consecutive moves, using a series of unexpected market operations to stake his reputation on suppressing American borrowing costs. According to Bloomberg, he has become the "most proactive Treasury Secretary in decades in intervening in the financial markets".
Following the U.S.-Japan joint intervention in the yen, Bessent's latest move is to expand U.S. bond repurchases. The Treasury Department announced that it would "at least double" the scale of repurchases of 10 to 30-year Treasury bonds—and this repurchase plan was only announced just two weeks ago. On the day the news was released, the yield on the 10-year Treasury bond fell by roughly 6 basis points, the 30-year yield fell by nearly 9 basis points, and the U.S. dollar index also fell to a three-month low.
The market's reaction confirmed Bessent's judgment: he has publicly stated, "My job is to be the nation's top bond salesman, and the U.S. Treasury yield is the barometer of success."
From Shorting the Pound to Guardian of the Bond Market
To understand Bessent's strategy, we must go back to 1992.
That year, in his early twenties, Bessent worked at the Soros Fund and participated in building a short position on the pound. On "Black Wednesday," the pound was forced to exit the European Exchange Rate Mechanism, and Soros netted over $1 billion. According to media reports, a former advisor described Bessent at the time as someone who "could see market vulnerabilities that others couldn't."
Afterward, he returned to Soros as Chief Investment Officer, leading a $1 billion yen short in 2013, once again reaping substantial returns. In 2015, he founded Key Square Capital Management with $4.5 billion, betting successfully on Brexit and Trump's two election victories.
This "find the crack, then push with the trend" hunter logic has run through his entire hedge fund career.
And now, he is using the same intuition to do the exact opposite—defend a market under pressure.
This Year's Intervention Map: From Yen to U.S. Bonds
Bessent's moves this year have already formed a clear logical chain.
Step One, Yen Intervention. On July 31, the U.S. Treasury, in conjunction with Japanese authorities, intervened in the market to buy yen, marking the first direct yen intervention by the United States in nearly thirty years. According to data from the Peterson Institute for International Economics (PIIE), Japan used approximately $87 billion of its foreign exchange reserves to purchase yen in the last two days of July, with the U.S. Treasury "joining in the final stages, providing a relatively limited amount of funding but sending an important political signal of support." It is worth noting that the Treasury sold euros instead of dollars, and the European authorities were not informed in advance.
Behind this move lies an undercurrent: Japan holds around $1.1 trillion in U.S. Treasuries, making it the largest foreign holder. If Japan had intervened alone to finance the intervention, it might have been forced to sell U.S. Treasuries, further driving up long-term yields. Washington's participation allowed Japan to sell fewer U.S. Treasuries, indirectly preserving the yield curve that Secretary Benson cares most about.
Step Two, Bond-issuance Contraction Signal. Earlier this month, the Treasury hinted at a potential reduction in the issuance size of long-term bonds, signaling an expectation of supply tightening to the market.
Step Three, Enhanced Repurchase. It was announced this week that the size of long-dated bond repurchases would at least double, providing direct support to prices from the demand side.
Bloomberg cited Brad Golding, portfolio manager at Christofferson Robb & Co., as saying this is akin to "an old-school ‘clean screens’ maneuver" — a hedge fund technique involving simultaneous orders to multiple major dealers to trigger significant market volatility.
Mark Sobel, a former U.S. Treasury official now with the OMFIF think tank, told Bloomberg, "He is absolutely a radical, which harkens back to his hedge fund background." "Both he and this administration are clearly concerned about the rise in long-term yields."
Breaking "Rules and Predictability"
Benson's actions are in direct conflict with the Treasury's traditional principles.
The U.S. Treasury has long adhered to a principle of "rules-based, predictable" debt management, avoiding surprises for the market. Benson himself publicly endorsed this principle at a Treasury market conference in November of last year.
However, his recent actions have deviated from this commitment.
Gregory Faranello, Head of U.S. Rate Trading and Strategy at AmeriVet Securities, told Bloomberg, "This violates the 'rules-based, predictable' principle — but that’s the world we're in." "The signal is clear: Prevent the rise in yields."
Ironically, Bernett's predecessor Yellen adjusted the debt issuance structure in 2023 to suppress yields, with Bernett being one of the critics at the time, accusing the move of being politically motivated. Former chief economist for Trump, Stephen Miran, also co-authored a paper in 2024 criticizing the "Aggressive Treasury Issuance" (ATI).
According to Bloomberg, Miran and Nouriel Roubini wrote in the paper: "Once a party starts using ATI to stimulate the economy during the election season, all future administrations may follow suit."
Question: Can Intervention Solve Structural Issues?
The market had a short-term reaction to Bernett's actions, but economists have more fundamental questions.
As of the first ten months of the 2026 fiscal year, federal net interest payments have reached $963.0 billion, approximately $3.18 billion per day, a 14% year-on-year increase. The 10-year Treasury yield stands at 4.72%, while the 30-year yield is at 5.31%—a significant amount of old debt previously issued at under 2% is now rolling over at higher rates. The deficit for the 2026 fiscal year to date is $1.8 trillion, expanding by 5% from the previous year, with spending on Social Security, Medicare, national defense, and interest on debt all rising, while the Republican Party is still discussing further tax cuts.
Robin Brooks, Senior Fellow at the Brookings Institution, bluntly told Bloomberg: "This is not addressing the root issues—reducing debt, shrinking the fiscal deficit, but rather trying to manipulate the yield curve."
John Velis, BNY Macro Strategist, also stated: "Given current spending policies and wars, alleviating pressure at the long end will be very difficult."
The effectiveness of yen intervention is also questionable. After hitting a high of 163.98 against the dollar on July 23, the USD/JPY pair fell to 159.43 by August 17, but according to CNBC, intervention did not prevent the continuous weakening of the yen. Maurice Obstfeld of the PIIE directly stated that intervention had minimal effect, saying, "Foreign exchange intervention is not a free lunch, not even a free cake."
Guy Miller, Chief Strategist at Zurich Insurance, told Bloomberg: "This approach can only work for a while. When the Treasury clearly states its intention to continue intervening, it can indeed have a quite strong effect. But ultimately, if the profligate fiscal policy is not addressed, this is unsustainable."
Onepoint Bfg's Chief Investment Officer Peter Boockvar was more direct: "He is waging war on two giant markets at the same time - the U.S. bond market and the foreign exchange market. This is an extremely difficult battle."
The Bet on Reputation
Bridgewater's logic, as articulated in his own words, is quite clear. Referring to the Trump administration's stakes in technology and resource companies last month, he said: "What we want to do is create a market signal." Speaking on Fox Business, he said: "Essentially, it's telling investors, okay, where the puck is going to be, skate there quickly."
The problem is that in 1992, shorting the pound was about finding a systemic weakness and taking advantage of it. Now, he is facing structural pressures driven by fiscal deficits, inflation expectations, and Fed policy - things that cannot be fundamentally changed through repo operations or exchange rate interventions.
According to Bloomberg, Mark Sobel, who served in the Treasury Department for nearly 40 years, believes Bridgewater is the most radical Treasury Secretary since the early 21st century. However, he also characterized yen intervention as an unwise move, arguing that it avoided the fiscal consolidation that the U.S. truly needs.
Original Article Link

TL;DR
· The U.S. Treasury will expand its repurchase of nominal coupon securities in the 10-20 year and 20-30 year sectors, increasing the single-operation limit from $20 billion to at least $40 billion.
· This operation is aimed at temporarily improving liquidity for longer-dated securities, reducing marginal term premiums, but is not part of the Fed's quantitative easing.
· Related Instruments: TLT, QQQ, Gold, BTC, and growth stocks sensitive to long-term yields.
On August 19, the U.S. Treasury announced an expansion of liquidity support operations for long-dated bonds, increasing the single-operation limit for nominal coupon securities in the 10-20 year and 20-30 year sectors from $20 billion to at least $40 billion.
This adjustment will take effect on September 9 and will continue until the end of the quarter refinancing on November 4. The Treasury stated that the scale of subsequent arrangements will be explained in the November 4 quarterly refinancing.
The market initially reacted positively to the news. According to an AP report, the 10-year Treasury yield dropped from 4.71% the previous day to 4.64%, while the 30-year yield decreased from 5.28% to 5.18%. A Reuters report indicated that the 30-year yield briefly fell by nearly 10 basis points to around 5.188%.
For investors holding technology stocks, long-duration bonds, gold, and crypto assets, this move primarily impacts discount rates. As long-term yields retreat, risk assets receive an initial valuation cushion. However, transforming it directly into "Treasury's version of QE" is still proceeding too quickly.
Treasury Buys Non-On-The-Runs
This operation does not involve purchasing all long-term government bonds, but rather focuses on less actively traded old securities, known as off-the-run securities. New issuance bonds have the best liquidity, and as trading in old securities diminishes, bid-ask spreads tend to widen, prompting holders to demand higher compensation.
When the liquidity of off-the-run securities deteriorates, pressure manifests in long-term yields. Market makers and institutions are reluctant to take on risk, necessitating higher yields to attract buyers. By increasing the repurchase limit, the Treasury is essentially proactively buying some illiquid securities when there is significant pressure in the long end of the market, facilitating a smoother trading system.
This is crucial for risk assets, as the 30-year yield serves as a valuation anchor. The higher the yield, the heavier the discount on future cash flows, putting pressure on growth sectors such as tech, AI, high-valuation stocks, and long-duration bonds. While gold and BTC do not have the same cash flow models, investors often include them in the trading framework based on real interest rates and global liquidity.
The boundary is also clear. The Fed's quantitative easing is the central bank expanding its balance sheet through bond purchases, creating reserves in the banking system. The Treasury Department's bond buybacks are debt management operations, with the funds still needing to be arranged within the fiscal accounts and debt issuance structure. It can improve trading conditions for certain maturities or types of bonds, but it will not automatically reduce the U.S. government's financing needs.
The Market Is Buying a Softening at the Long End
The market reacted quickly because this move targeted investors' most sensitive area. With the 10-year yield above 4.6% and the 30-year yield above 5%, any signal that can lower term premiums is seen as a valuation pressure relief and is traded as such.
Bond prices rise, corresponding to a decline in yields. Stocks rise, corresponding to a softening of discount rates. If gold is traded based on real interest rate fallback logic, it will also benefit. The response of crypto assets depends more on risk appetite and liquidity expectations, but in macro trading, they may still be linked to the same chain.
According to Axios, TD Securities' Gennadiy Goldberg characterized this operation as "not QE." Reuters quoted BCA's Ryan Swift, who stated that this move is more of a signal, and the impact may be temporary.
This is the core of the current rebound. What the market bought into first was the Treasury's unwillingness to allow a deterioration of liquidity at the long end of the market, rather than the fact that the Treasury is already capable of keeping rates low in the long term. The former is enough to trigger short-covering, while the latter still requires actual purchase volume and issuance structure to validate.
Raising Beardson's Tools Faces Supply Constraints
The first variable limiting imagination in this trade is scale. In the Treasury Department's August 5 quarterly refunding statement, the liquidity support buyback cap for this quarter was set at a maximum of $38 billion. With the increase in the long-end operation limit, calculated based on the current schedule and single cap, the additional cap is at most about $14 billion.
This number is not insignificant in a single-day price move, but in the context of the U.S. fiscal deficit, long-term bond stock, and quarterly funding needs, it is not enough to change the overall direction. It is more like adding a cushion at the most congested point in the market rather than removing long-end supply pressure.
The second variable is a funding source. The Treasury's buyback of old bonds cannot create funds out of thin air. If buybacks need to be supported by more short-term or mid-term bond issuances, the pressure may simply shift from the long end to other maturities, altering the yield curve's shape, but the financing needs persist.
The third variable is inflation and the Fed. As long as inflation expectations are not stable, or if the Fed maintains a somewhat tight stance, long-term yields will eventually return to fiscal supply, real rates, term premiums, and buyer demand. While the Treasury can enhance market microstructure, it is challenging to unilaterally rewrite macro pricing.
Therefore, a more prudent assessment is that this operation marginally benefits long-end assets, especially when the market was previously heavily positioned for rising yields, making it prone to a rebound. However, it does not prove that the upward pressure on long-term rates has ended.
November Refinancing Tests the Rebound's Strength
The extent of this rebound will depend on whether the Treasury turns temporary liquidity support into a more systemic issuance structure adjustment. The quarterly refinancing statement on November 4th will provide information on the next phase of buyback size and bond issuance arrangements.
If the actual buyback amount approaches the raised ceiling and, at the same time, net issuance of long-term new bonds slows down, the market will be more willing to believe that the Treasury is proactively reducing upward pressure on long-term supply. The repricing of long-dated bonds, growth stocks, gold, and BTC will also have a smoother continuation.
If buybacks mainly serve as a signaling tool, and long-term issuance pressure does not decrease, possibly requiring more short-term debt in addition to financing, this operation will resemble more of a tactical move to stabilize the market. It may dampen short-term volatility but will struggle to alter investors' long-term demands regarding deficits, inflation, and term premiums.
For risk assets, this is not a scenario that can unconditionally lead to a dovish narrative. It serves as a cushion in long-end rate trading, with the short-term direction clear but the strength determined by actual execution and long-term net supply.

Google Ties Stock Options to Chip Supply, Clinical Results and Leveraged Short Squeeze are Turning Long-Term Expectations into Price. The latest developments in Homsud indicate that whether the supply can stably reach the market remains a hard constraint.
1｜Google Ties Stock Options to Marvell, Procures with Capital Incentive Embedded in Same Contract
Marvell disclosed that it has issued warrants to Google to subscribe to up to 58.97 million shares of common stock, with an exercise price of $206.58 per share, exercisable no later than August 2033. If all are exercised, approximately $12.2 billion would be calculated at the exercise price. The warrants are tied to Google's revenue target for custom chip procurement.
This does not mean Google has already paid $12.2 billion, nor has it locked in all future orders. The procurement scale and vendor equity incentives are written into the same arrangement, which may strengthen long-term cooperation between the two parties and increase the opportunity cost of exiting the partnership. Major cloud providers are using capital tools to increase supply chain certainty in key design stages.
(Source: Marvell / CNBC)
2｜Bitcoin's Sharp Rise Triggers Massive Short Squeeze, Leveraging Amplifies Short-Term Market
Bitcoin broke through $68,000 during trading on August 19, approaching $69,000 at one point. CoinDesk cited CoinGlass data indicating that around $1.4 billion worth of short positions were liquidated in the previous four hours. Ethereum rose nearly 9%. News of long-term Treasury bond repurchases concurrently suppressed US bond yields, but this cannot be construed as the direct cause of the rise.
After surpassing the short squeeze level, additional buying continued to drive the market higher. What the market needs to observe is not $69,000 itself, but whether leverage is accumulating again, if spot funds can support, in order to determine whether this trend is a short squeeze or a longer trend. Short-term fluctuations could still be further amplified.
(Source: CoinDesk / CoinGlass / CNBC)
3｜Moderna and Meruson's Personalized mRNA Vaccine Phase III Trial Meets Criteria
Meruson and Moderna announced on August 19 that the personalized mRNA candidate vaccine intismetran autogene combined with Pembrolizumab's III phase INTerpath-001 trial achieved the primary and key secondary endpoints. This global randomized, double-blind trial included 1,137 fully resected stage IIB to IV melanoma patients, with registration number NCT05933577.
This is not regulatory approval. Full efficacy, long-term survival, and safety data are still pending disclosure and review. For the mRNA platform, Phase III clinical endpoints have provided a validation milestone for the oncology pipeline, but the outcome for one indication does not equate to widespread commercialization.
(Source: Merck / Moderna / ClinicalTrials.gov)
4｜UAE Cuts Trade with Iran, Hormuz Sees U.S.-Led Oil Shipping Lane
The UAE announced on August 19 a halt to trade, commercial links, and financial transactions with Iran. AP reported that the UAE had been targeted by Iran again. According to Axios citing U.S. officials, the U.S. military organized a shipping lane in the Strait of Hormuz near Oman, through which about 10 million barrels of oil pass daily, roughly half of pre-war levels.
While trade settlement channels are tightening, physical crude flows are being attempted to be maintained. The shipping route has yet to normalize. Reuters data on August 14 showed only 9 ships transited the strait in a day, averaging about 12 ships in August, far lower than the pre-conflict level of around 130 ships. Oil price risks depend on security, insurance costs, and continuity. (Continuation of yesterday's report)
(Source: AP / Axios / Reuters)
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Cognition CEO Scott Wu denies SpaceX sought acquisition. Bloomberg reported that SpaceX had considered acquiring Devin developer Cognition at around a $40 billion valuation, but Wu stated the company is not for sale. The parties are still discussing a computing power collaboration with no agreement yet. (Continuation of yesterday's report) (Source: Bloomberg / TechCrunch / Reuters)
The U.S. Treasury raises the single-day limit for some long-term bond repurchases to at least $4 billion. Reuters stated the operation covers 10- to 30-year bonds, causing the 30-year yield to subsequently decline. Repurchases are not equivalent to Fed rate adjustments. (Source: U.S. Treasury / Reuters / CNBC)
The U.S. pauses 50% tariffs on Canadian goods for three days. Trump claims an agreement, while Reuters noted key terms are still undisclosed. The pause does not mean trade conditions have been finalized. (Continuation of yesterday's report) (Source: White House / Reuters / BBC)
Samsung Electronics reportedly raises new orders' prices by 5% to 15% for some advanced processes. The SF4 price increase for Chinese and American customers is said to be 10% to 15%, with AI chip demand boosting capacity utilization. (Source: Reuters / Tom's Hardware)
The U.S. Securities and Exchange Commission (SEC) has proposed a draft of the "Cryptocurrency Asset Regulation Act," which includes two types of cryptocurrency issuance exemptions. The SEC stated that one type is applicable to early-stage projects that raise up to $5 million within four years, while the other type can raise up to $75 million within 12 months. The proposal is not yet in effect. (Source: SEC)
Sarah Friar, CFO of OpenAI, announced that the company plans to go public in 2027 or earlier. On the same day, OpenAI pledged not to retain data from corporate clients using its models. The Wall Street Journal reported that this arrangement is aimed at attracting corporate clients unhappy with Anthropic's data retention policy. The exact timing of the IPO is still an internal expectation. (Source: CNBC / The Wall Street Journal / TechCrunch)