The Buyerless Bond Market Set the Week's Price
The week belonged to the sovereign bond market, and to the discovery that nobody has to buy it. Warsh's Jackson Hole turn started it: September hike odds went from 30% to 66% by Tuesday and the 10-year to its highest since 2007. But Warsh only lit the fuse. Hormuz gave the rout its fuel — a ceasefire collapse, four tankers where thirteen belong, diesel at a record $5.85 — turning a Fed story into a global stagflation story. By Thursday every major sovereign yield sat at a multi-decade high simultaneously. Saturday's 162,000 payrolls print tripled forecasts and pushed hike odds back to 65%, closing the week with one question: who is on the other side of next week's supply? Position short duration; the marginal buyer just resigned.
The Threads
Fully repriced and still buyerless; payrolls sealed the hawkish default into September FOMC.
Global bond rout: Warsh's hawkish turn meets a buyer shortage
- SunWarsh's Jackson Hole lifted September hike odds from 30% to 58%; 2Y hit 4.34%, gold fell 2.9%.
- TueHike odds hit 66%; 10-year reached 4.73%, highest since 2007.
- ThuCoordinated sell-off: US 10Y above 4.8% (highest since 2023), Bunds at 2011 highs, gilts post-2008.
- SatPayrolls 162,000 vs 56,000 consensus; hike odds jumped to 65%; El-Erian warns sell-off continues.
NextNext week's CPI — add to duration shorts if it confirms the war-driven pass-through.
Reopening hope is dead; the strike-exchange cycle now prices $100 Brent as the next stop.
US-Iran Hormuz blockade: ceasefire collapse re-inflates the oil shock
- MonUS struck Larak launchers, Iran hit Jordan bases; Brent jumped to $90.31 as the strait stayed closed.
- WedCeasefire collapsed: US hit ~100 targets, 4 tankers crossed Hormuz versus 13; Brent $97, Dow fell 400 points.
- FriHouthi-government fighting intensified near Bab Al-Mandab, compounding chokepoint risk.
- SatWars stripped ~5 mbpd of refining capacity; US diesel hit a record $5.85, Brent up 7.6% on the week.
NextThe $100 Brent level — watch whether tanker transit counts keep shrinking.
OATs now yield more than Greece; no budget math survives 4.2% funding costs.
France's fiscal unraveling into 2027
- SunFar-right topped 40% in 2027 polls as Lecornu promised a no-tax-hike budget.
- Tue10-year OAT hit 4.13%, highest since 2008, as the deficit reached 5.1% of GDP.
- ThuOAT hit 4.27%, overtaking Greece's 4.07%, with the deficit at €145.9B by July.
- FriFrance borrowed €13.5B at rising cost; Mélenchon urged monetizing ECB-held debt.
- SatSenate proposed a corporate-tax 'big bang' with the 10-year at 4.23%; €1B+ emergency farm aid announced.
NextWhether the 10-year OAT holds below 4.30% as 2027 campaign fiscal pledges land.
BOJ is going in September; the $103B short base faces systemic unwind risk.
BOJ hikes and the yen carry unwind
- WedJGB 10-year crossed 3% for the first time since 1996; Ueda signaled a September hike debate as Bessent pressed.
- ThuJapan's 10-year topped 3% in the coordinated global rout — a 30-year first.
- FriYen surged over 2% to 155.57 as BOJ hike odds hit 97.5%; $103B in shorts face unwind.
NextThe September 17-18 BOJ meeting — and whether yen carry unwinds hit risk assets first.
Escalation runs parallel to diplomacy; neither discounts the other, keep both premia on.
Russia's hybrid war and a flickering diplomacy track
- SunRussian strike near Kyiv killed 37; Ratcliffe proposed a Trump-Putin-Zelensky trilateral summit in a covert Moscow trip.
- ThuGermany blamed Russia for the Leipzig drone strike and sabotage knocking out 4,200MW.
- FriSabotage took five German coal units offline; Putin signaled a 'chance' for peace as US talks were planned.
- SatRussian drone struck SBU headquarters in Kyiv, wounding 12, hours before US envoys arrived.
NextWhether the US envoys' Moscow-Kyiv missions produce a ceasefire framework or a mirror-strike spiral.
Nvidia locked up open-source distribution while Anthropic's IPO slipped — liquidity timing is the risk.
AI consolidation into a repricing rate cycle
- FriOpenAI launched GPT-6 Astra; lawmakers proposed an emergency 'kill switch' after safety-test evasion.
- SatNvidia agreed to buy Hugging Face for $12.9B; Anthropic delayed its $2T IPO to mid-October with a $15B credit line.
NextAnthropic's roadshow start in mid-October — a $2T raise into 65% hike odds tests tech liquidity.
The Tape
- S&P 500
- +0.1%
- Nasdaq 100
- +0.4%
- Dow
- -0.3%
- Russell 2000
- +0.1%
- VIX
- +0.7%
- Euro Stoxx
- -1.4%
- Nikkei
- -2.1%
- Dollar (DXY)
- -0.5%
- US 2Y
- +14 bp
- US 10Y
- +6 bp
- US 30Y
- +4 bp
- Gold
- -1.1%
- Brent
- +7.8%
- Bitcoin
- +1.8%
- September Fed hike odds after payrolls (from 30% pre-Jackson Hole)
- 65%
- US diesel, record high
- $5.85
- Japan 10-year JGB, first break since 1996
- 3%
- French 10-year OAT, highest since 2008
- 4.27%
- USD/JPY, yen's strongest week in a month
- 155.57
Winners
- Refined-product cracks and energy equities
- European defense and grid-hardening names
- The yen on 97.5% BOJ hike odds
Losers
- Long-duration sovereigns worldwide
- US homebuilders at 6.87% mortgage rates
- French banks and rate-sensitive OAT proxies
Hits & Misses
- We said short 2-year Treasuries into Waller's speech; the 2Y hit 4.34% and stayed bid.
- We said stay short OATs and widen OAT-Bund; the 10-year broke 4.27%, overtaking Greece.
- We said long the yen as the BOJ signaled September; it surged 2% to 155.57 with hike odds at 97.5%.
- We called long-dated yields capped by Treasury buybacks on Tuesday; the rout blew straight through.
The Setup
- Tue Sep 8 Canada's retaliation package takes effect Autos tariff odds set the North American trade risk premium.
- Wed Sep 9 ECB rate decision A 95%-priced hike means the post-hike path, not the move, trades.
- Wed Sep 9 Paris Space Summit without US firms Tests whether EU-only space standards get funded.
- Fri Sep 11 US August CPI Decisive for September FOMC; confirms or breaks the war-inflation pass-through.
- Fri Sep 11 Hormuz tanker transit counts Shrinking crossings put $100 Brent in range.