Bombing the bond market
Summary
Hosts Katie Martin and Rob Armstrong analyze the escalating conflict in US bond markets, where Treasury Secretary Scott Bessent’s attempts to suppress yields are being interpreted as weakness. The episode covers President Trump’s bizarre threat of military intervention, a sharp critique from mentor Stan Druckenmiller, and growing tensions with Fed Chair Kevin Warsh. They discuss how rising deficits and the $40 trillion debt milestone are driving investor anxiety, concluding with Armstrong shorting the dollar and Martin long on tinned chickpeas.
Topics discussed
Promo for FT Weekend Festival and Unhedged live event
Introduction: The Great Bond War of 2026
Host banter: Rob's vacation and Canadian bears
Trump's threat of military intervention in bond markets
The seriousness of rising long-term Treasury yields
US-Japan currency intervention and the Streisand effect
Treasury's unusual bond buybacks signal weakness
Normal vs. abnormal Treasury buyback operations
Using the Treasury General Account to prop up bonds
Stan Druckenmiller criticizes Treasury's price management
Why long-term yields are high: Deficits and inflation
US national debt crosses $40 trillion milestone
Besant's claim of asymmetric information and fiscal plans
Conflict between Treasury Secretary Besant and Fed Chair Warsh
Long/Short: Shorting the dollar and long tinned chickpeas
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