"I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody." James Carville
Is there hope? After years in the wilderness, the J-E-T-S looked like an actual professional football team! It’s only one game, but my Jets are undefeated and tied for first place. End the season now!!!
Watched a world-class Rugby match between the South African Springboks and the New Zealand All Blacks (think
Invictus), and I've newfound respect for the game ( Oh, and Go SpringBoks!). I still have vicarious bruises from watching!
**THE STOP PRINTED.**My 2s10s steepener closed at +33bp on Friday, exactly its written level, and I took it. The duration short goes to three quarters. I’M WRONG IF the 10Y closes under 4.60% three times.**THE BARREL IS A LOGISTICS PROBLEM NOW.**A shut bypass line carrying roughly 5 million barrels a day is not a risk premium. Long the freight equity at a half. I’M WRONG IF a Hormuz accord is signed with a date attached.**THE PUMP IS A TAX.**Brent 107.44 reaches the discretionary dollar inside a fortnight and never touches a staples income statement. Long staples against discretionary. I’M WRONG IF discretionary beats staples on two sessions crude rises 2%.**ONE AFTERNOON HOLDS 70% OF THIS BOOK.**I carry 2.00 units into a hike and nothing at all into a hold, because the offset that covered it stopped out this morning. I’M WRONG IF the committee holds Wednesday.
The 2Y closed 4.63%, up 7bp and at a fresh 52-week high; the 10Y 4.96% and the 30Y 5.35%. 2s10s ended at +33bp, 6bp flatter, and every basis point of it came from the front.
August core CPI printed 0.3% on the month against a 0.2% consensus, 2.4% on the year; headline 0.4% and 3.4%. Futures price Wednesday’s hike at 88.5%, prediction venues at 48 to 50%, and 70% of economists polled still say hold.
Saudi Arabia’s East-West pipeline is shut after drone strikes launched from inside Iraq on 11 September. Brent settled 104.61 and trades 107.44 after a 108.65 high, an eighth consecutive settle above 95. WTI 103.29, up 3.24%.
The only scheduled de-escalation meeting of the week, Iran and the Gulf states in Oman, was postponed Sunday for lack of consensus.
Friday was a rally: the S&P closed 7,656.98, up 0.90%, snapping a four-session slide, with technology the best sector at +1.32%. This morning NQ futures are 28,873.00, down 1.75%, and the KOSPI lost 3.26%.
I think today is being written up as two stories and it is one. The AI slowdown call and the pipeline are both real. Neither explains a 2Y at a 52-week high on a morning equities are down, and the rates market has now won this argument against every institution that tried to talk it out of it.
THE ARITHMETIC.
Treasury tripled its long-end buyback, and the 30Y cheapened as a result. The operation underwhelmed on Wednesday and underdelivered on Thursday, and the week ended with the 10Y at 4.96%, a three-year closing high.
The Chair spent Jackson Hole saying he needed improvement in inflation. He did not get it, so he is boxed. Futures went from about one and a half hikes priced on 27 August to about three and a half by 11 September.
August was not a bad month for inflation. Trimmed mean CPI is at its lowest since early 2021, sticky prices and the median both slowed, and wireless telephony alone added 10bp to core (Omair Sharif, Inflation Insights). The share of components running strongly above the 3% upper bound fell sharply (Robin Brooks, Brookings).
The exception is what people buy. Retail diesel broke $6 a gallon for the first time last week, up from roughly $3.50 in January, and Gulf net exports of diesel and gasoil in August ran at just over a quarter of pre-war levels (IEA). Trump spent Sunday asking Zelenskyy to stop striking Russian refineries over it.
So the hike arrives on a print that argues the other way, because the curve made it expensive not to. I am not reading Wednesday as a data decision.
THE SETUP, and here is where I part from consensus.
The street is selling this as a term-premium story: fiscal illegibility, a $1.97 trillion deficit with a month of the year left, a $5,000-check promise, debasement. The decomposition says otherwise. Year-to-date, the 2Y is up about 105 bp and the 10Y about 70 bp, and at 10 years the term-premium slice is nearly nothing.
If this were a fiscal event, the long end would lead and the curve would steepen. It flattened 6bp on Friday and all of it came from the front, for the fourth time in six tests.
It could also be that the decomposition is a model output fitted to a world with a functioning private bid. A flat term-premium estimate does not necessarily mean the fiscal channel is absent; it may simply mean the estimate has not caught up.
The one that cuts against me is gold. Bullion has tracked 30-year term premia all decade and is down 1.87% this morning, failing at 4,400 a third time. The other read is that a stronger dollar and a higher real rate sell bullion on any morning, and that tells you nothing about the fiscal path.
THE CASE AGAINST, and it is not weak this time.
70% of the economists Reuters polled still expect a hold, and prediction venues price the meeting near half against 88.5% in futures. Those instruments are not measuring the same object, and I have been burned treating them as if they were.
If the committee holds, my book has nothing in that branch. The steepener that covered it closed at its stop, and the free unit in the volatility factor cannot be spent because that line carries no add condition.
A second reading of the hike itself: a central bank that hikes signals it is on the job, long-end expectations compress, and mortgages cheapen on a tightening. Patrick Harker made that case last week, and it carries the opposite sign to mine.
The cost is visible. Homebuilders are rolling over with the 30-year mortgage benchmark at 6.04% and retail mortgage rates at 6.85%, the highest since June 2025.
**8:30 ET, Canada CPI.**Survey 3.0% on the year with core-trim at 1.9%. Carney is absorbing 50% US tariffs on $20 billion of goods and has signaled no retaliation, so a hot print removes the one offset he has left.**Today, Europe’s consolidated equity tape goes live.**The first single price and trading feed across venues. Structurally it matters more than anything else on the calendar and it moves nothing today.**Wednesday 16 September, the FOMC and the dots.**Then the Bank of England Thursday, held at 3.75% with the door open, and the Bank of Japan Friday, where 1.00% to 1.25% is the expectation. Friday is also triple witch and the S&P rebalance.
**The conflict, up top:**the best single mover in the market on Friday and one of the worst this morning are the same stock. HPE closed up 12.44% on Friday and trades down about 6% premarket. One tape paid the buildout on Friday and is selling it today, and neither session had new information about the buildout in it.**ORCL, 150.28 Friday, 144.99 premarket.**It opened at 164.43 against a 152.94 close on a beat and a raise, traded 166.00, and finished within 44 cents of the session low. A 10% intraday reversal on the best quarter the company has printed in years. A plan to sell up to 50 million shares was disclosed Friday and canceled Saturday with nothing sold (Reuters, WSJ). Forty-three analysts carry an average target 59% above the price. I am short a half unit into that.**FRO, 49.21 Friday close and 50.11 premarket, on its 52-week high.**Ton-miles and war-risk insurance both stepped up in the same weekend. Four covering analysts carry an average target of 47.00 against a 50 dollar stock, with two downgrades inside three weeks, so the sell side is positioned for rate reversion. Buying a 52-week high on a weekend headline is the risk and I have sized it as one.
Behind the wall this morning:
THE BOOK: 13 live lines, 4 new today and a fifth dated to tomorrow’s open, each with the factor it monetizes, its size and the condition that kills it.
The financials sleeve after the fourth failed regional lead in eight sessions, and why the largest single-name line this book has ever carried is a broker.
Every kill switch with its distance to trigger as a number, including the one sitting 5bp away and the two now reducing the same position within 5bp of each other.
What a hold on Wednesday does to seven of the 13 lines, position by position.
Every word above this line is free and stays free. What sits below it is my own capital at risk, line by line, with the level that closes each one. $450 a year at marketmusing.com, or the price of one bad lunch a month.
Bill Allison of Bloomberg reported yesterday that Steve Witkoff earned $107 million in 2025 from the holding company that keeps his share of World Liberty Financial, the cryptocurrency venture he and the Trump family founded and in which Sheikh Tahnoon bin Zayed Al Nahyan, the brother of the United Arab Emirates’ president, has invested half a billion dollars. Witkoff is Trump’s special agent for the Middle East and has been negotiating with Russia. Trump reported earning more than $594 million in 2025 from the same venture.
Disclaimer: Opinions are mine alone and may change. It does not constitute an offer to buy or sell or a solicitation of an offer to buy or sell any security, loan or asset or to participate in any trading strategy. It is not intended to form the basis of any investment decision, should not be considered a recommendation, and does not constitute an offer or solicitation with respect to the purchase or sale of any investment, nor is it a confirmation of such terms.
