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The Fed Owns Over 50% Of All Bonds Maturing Between 10 And 15 Years From Now

Zero Rss
1 month 3 weeks ago
The Fed Owns Over 50% Of All Bonds Maturing Between 10 And 15 Years From Now

Submitted by Peter Tchir of Academy Securities

Treasuries, Treaties, and Treatises

Let’s start with Treasuries. We laid out the approach we would take if we were Warsh last weekend in Warsh’s Mark Antony Moment (a play on coming to “bury” inflation, yet having quite the opposite effect, at least in terms of interest rate policy). 

After Bessent’s “attempt” to drive bond yields lower, we analyzed the possibilities in Treasury, Treasuries, The Fed, and Iran. The primary focus was on bonds, though we had to toss in the “possibility” of Economic Armageddon for Iran.

On Monday we discussed the Fed on Fox Business, but they picked up our theme on Tuesday where Academy was the chyron on Varney & Co. Academy had the pleasure of spending the first half hour on Bloomberg TV on Thursday where we covered rates, Iran, energy, Global ProSec, and maybe even Situational Awareness (it all becomes a bit of a blur).

Please read Thursday’s report, in conjunction with last weekend’s report (or watch the video links) to get a sense of our outlook for Jackson Hole and what the Fed should (or needs to do) to support Bessent’s efforts.

Today, we will add some additional information to reinforce our take on the power of a Federal Reserve Operation Twist.

A Fed “Operation Twist” Is the “Real” Deal

As of today, according to Bloomberg, the U.S. government has $7.5 trillion of T-bills outstanding and $21.7 trillion of coupon debt outstanding.

Bessent is buying “at least $4 billion” per “operation.” These operations are almost weekly, and while the threat of “at least” is interesting, jumping from $2 billion to $4 billion wasn’t enough to move markets for long. This is NOT QE. Gold rose, and the dollar fell, in response to Bessent. Likely overdone as this is more about re-arranging the deck chairs, rather than creating “money,” which is what the “debasement” trade seemed to buy into.

I’m not sure the Treasury Secretary should ever refer to any part of the US yield curve as illiquid. But Bessent did. Maybe he is remembering the “good old days” when nothing happened in August. I don’t think this August was sleepy, nor particularly illiquid.

Having said that, the Federal Reserve owns over 50% of all bonds maturing between 10 and 15 years from now. That seems a long way from “free” markets. The Fed’s holdings of longer-dated bonds are quite high (nearing 20%). It might be illiquid and partially “artificial,” but not in the way that Bessent implied.

The Fed owns almost half a trillion of bonds maturing within the next year.

These are coupon bonds (not T-bills).

The average coupon is 2.9%, so the Fed is bleeding money. They own, on an accrual counting basis, these bonds at the yield they purchased them at (probably lower than 2.9%) and fund at Fed Funds Effective (3.63%). It explains why the Fed was helping to “artificially” reduce the deficit with their payments to Congress, and now they are adding to our deficit woes by bleeding carry.

Let’s imagine the Fed selling that $426 billion, and buying the same notional amount of bonds with 20+ years maturity. A small up-front loss (they’d have to monetize the premium they paid for their bonds), but a very big pick-up in carry (5.25% or so on carry vs funding of 3.63%). It would also represent over 15% of the total amount of bonds with a maturity of 20 years or more (and over 20% of the float the Fed doesn’t already own).

If they decided to do the same with their bonds maturing in 1 to 3 years, they’d have a bigger up-front loss, but more carry going forward, and would own over 50% of the debt outstanding.

I don’t know what percentage of ownership constitutes “cornering” a market, but we’d pretty much be there.

From Warsh’s perspective (and that of all Fed members), Operation Twist does NOT count as QE because it keeps notional amounts the same. If the admin wants to see the long end of the yield curve go down, they need to stop “playing” with the amounts Bessent controls and go all in on a Fed-driven Operation Twist.

Can’t say I’m a fan, but why not?

In the coming days we should find out if Bessent is “on his own” or if the Fed is throwing their weight behind his efforts to control the longer end of the bond market.

When Bond Traders Say “Done” – They Mean “Done”

Whatever else you learned in school, or on the trading desk, the most important thing you are taught is “done means done.” You’ve committed your capital (or the firm’s capital) and it might be a good or bad decision, but you are “done.” You are stuck with that trade. Trying to back out, or change the terms, or beg for some accommodation, may work (exactly once), but your reputation is toast.

I haven’t done a deep dive on any of the following (so I could be wrong), but it is difficult not to see a pattern emerging, that seems problematic down the road. There are many factors outside the public domain, and we all know negotiating deals is not easy, especially when the parties involved are very far apart on many of the issues. However, the concern is that the negotiating strategy we sometimes use could be misconstrued by certain countries and work against us in some circumstances.

  • Canada getting 50% tariffs (again). But according to Canada they walked away when the U.S. introduced unfavorable terms at the last minute.
  • Saudi Arabia getting help to develop non-military nuclear capabilities. But that seemed to derail almost immediately, when there was “confusion” over terms that supposedly required the Saudis to agree to join the Abraham Accords. Again, the goal is for the Saudis to join the Accords one day, and it is unclear if this was a part of the discussions initially.
  • The “Board of Peace” (a misnomer if there ever was one, given some of the cast of characters involved) announced a peace deal between Israel and Hamas. Which would be great if even one of the sides had agreed.
  • Not sure why we are “both” pulling back on military exercises in South Korea and reaching out to North Korea. Yes, there are reasons (South Korea importing a lot from the Middle East and not helping in the war, etc.) but still seems odd.
  • The original MOU with Iran. Within days, the $300 billion of economic relief sounded like it needed to come from other countries, none of whom had agreed. The language about the Strait seemed pretty favorable to Iran, and different than what the President said (hence why we were quickly back to fighting over it). Iran is notorious for changing terms and making any negotiation difficult, which is why it is said that while Iran has never won a war, it has never lost a negotiation. We know it will likely take more time to get Iran to agree on a satisfactory deal, but the devil is always in the details.
  • The UK had the first “friendly” trade deal. Who knows what has actually been documented, but it didn’t stop the U.S. from adding some tariffs for sending troops to Greenland while the U.S. talked about annexing Greenland.
Bottom Line

Either the Fed helps Bessent on Treasuries, or this recent intervention will fall flat (and probably do more harm than good, which is often the case when an intervention is attempted but doesn’t succeed).

My gut is there is more to come, but we really need to see something from Warsh and the Fed at or before Jackson Hole.

Whatever negotiating tactics worked well in Trump 1.0 don’t seem to be as effective during Trump 2.0. I could be wrong, and am playing chess in the wrong dimension, but I’m concerned the U.S. is “kicking the hornet’s nest” (which probably needed to be kicked), but the outcome might not be as good for the U.S. economy (and the stock market) as it could be!

On Iran, it seems there is only so much we can do economically without confronting China, and that is a confrontation that is fraught with dangers to our economy (and another reminder of why we need to smelt, process, and refine things here in the U.S. ASAP – or with our close neighbors, but that seems to have taken another step in the wrong direction).

Or maybe I’m just tired and cranky as the dog days of summer have taken a toll on my psyche. 

And this report had nothing to do with Treatises, but it seemed to go well with Treaties and Treasuries, and I thought it might attract Spider’s attention as he teaches me a new word almost every time we see clients together!

Tyler Durden Sun, 08/23/2026 - 12:50
Tyler Durden

Did Canada Just Sign Its Own Economic Death Warrant?

Zero Rss
1 month 3 weeks ago
Did Canada Just Sign Its Own Economic Death Warrant?

Canadian Prime Minister and WEF globalist Mark Carney has been a disaster for Canada since he entered office.  There were many critics who believed the Trudeau regime could not be topped in terms of self destructive behavior, but one could easily argue that Carney is far more dangerous and far more devious.

This week the Canadian government abandoned a nearly finalized trade deal with the US in the final hour of talks, leaving many analysts (and Canadians) bewildered.  According to U.S. Trade Representative Jamieson Greer and related reports on the negotiations, the U.S. offered significant tariff reductions that would have given Canada preferential treatment relative to other major exporters.  

The offer included a reduction of tariffs on steel from 50% to 25%, a reduction on Canadian autos from 25% to 15%, a removal of the 10% tariff on Canadian lumber and cooperation on numerous other measures, representing the best deal offered in comparison to any other country which relies on heavily US markets.  Carney abruptly ordered negotiators to walk away, claiming the deal was "not good enough", and declared further retaliation against the US.  

So basically, Carney is saying:
Canadians will lose buying power, pay more for goods, and lose jobs, but it’s a sacrifice I’m willing to make to save face with the “elbows up” crowd. pic.twitter.com/cGVMnahbxy

— Pascal Anglehart (@DemosKratosCA) August 22, 2026

As of this moment 50% tariffs have been implemented on the majority of Canadian goods - The sudden shift represents economic suicide for Canada given their deep dependence on the US.  And what Carney doesn't tell Canadian citizens is, there are no practical alternatives to fill the trade void left behind.

Around 78% of all Canadian exports rely on US consumer markets.  These goods and resources only make up around 13% of all US imports.  Meanwhile, around 15% of US exports go to Canada.  In the US, exports make up 11% of total GDP.  In Canada, exports make up 33% of GDP.  

Economic is partially about psychology, but it's mostly about numbers, and the numbers just don't add up for the "Great White North".  By every metric, Canada needs the US more than the US need Canada.  Without these exports, Canada would suffer severe instability within a few years.    

The Canadian Central Bank, though, has tried to dismiss the dangers of prolonged trade disruptions with the US and Carney has sought to temper public concerns with posturing and bluster:

“You’re at war when you get attacked. We got attacked.”

This "war" rhetoric from the Prime Minister has been constant since he entered office - A clear attempt to sensationalize trade negotiations and excite the Canadian public with existential fears.  Bizarrely, Carney insinuated that the US was threatening Canada's sovereignty, culture and languages.  The hypocrisy of a devout globalist pontificating about national culture and "sovereignty" is stomach churning, but these declarations are highly strategic. 

‼️Just in - Mark Carney addresses Americans in French:

-to my American collegues, let me be CLEAR ... our culture, French language and our soverignty are NOT on the table

-announces SWEEPING retaliatory tariffs on American goods

He will burn us to the ground for Quebec. pic.twitter.com/2OaPPhplSO

— Tablesalt 🇨🇦🇺🇸 (@Tablesalt13) August 22, 2026

Carney has been pursuing trade deals with the EU and China in an attempt to "replace" US markets and save Canadian exports.  These agreements are being hailed by the Davos crowd as a "New World Order" that decouples from the US economy.  However, there are a number of problems.

The US makes up over 30% of total global consumer markets.  The entirety of the EU makes up around 15% of consumer markets and China makes up around 12%.  Together these regions still don't fill the hole left by the US, and there are numerous expenses attached.

China regularly enforces tariffs on Canada, while shipping goods overseas to Europe or Asia adds price hikes to Canadian goods that would not be an issue in trade with the US.  Meaning, they will sell far less overseas. 

Furthermore, Chinese trade deals tend to come with strings attached.  China is seeking economic and resource expansion into Canada, which is ruffling feathers among Canadian companies and citizens.  Beyond that, the CCP often demands influence over government policy within the smaller countries it partners with economically (Canada's relationship with Taiwan has been a point of contention as the CCP exerts pressure). 

This is Carney today admitting that limiting trade with China due to forced labor practices was part of the deal he walked away from.
Translation - Ya we care about forced labor, but not enough to stop dealing with Chinese markets that may or may not use it. pic.twitter.com/YfUTbfrUae

— Ryan Gerritsen🇨🇦🇳🇱 (@ryangerritsen) August 22, 2026

In other words, Carney claims to be saving Canada from being dominated by the US, but he will end up selling his nation's sovereignty to China or the EU just to spite the Trump Administration.

Carney's behavior in light of these negotiations might seem bizarre, but it makes perfect sense if we consider the possibility that his goal is to cripple the Canadian economy deliberately and make it a pawn in a greater war waged by the Davos elite to isolate conservative movements in the US.  The majority of anti-globalist and anti-multicultural movements around the world rely on American efforts to defeat the progressive agenda.

In other words, global lines are being drawn right now for a fight over who will decide the course of the future.  Carney is clearly steering Canada to the side of the WEF ideal.  

Tyler Durden Sun, 08/23/2026 - 12:15
Tyler Durden

Robot athlete turns into crash test dummy after smacking into wall

NY Post
1 month 3 weeks ago
A humanoid robot lost control while sprinting around a track during testing ahead of the World Humanoid Robot Games in Beijing. The robot slammed into a wall and crashed to the ground, causing sparks to fly from the robot’s waist. Another video shows a humanoid robot warming up, crashing into electrical boxes, knocking them to...
New York Post Video

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