August month-end duration extension always a good opportunity to set up for the deluge of Corp supply in early Sept. Not that surprised by the aggressiveness of the front running but feel it started a bit earlier than expected.

Stanley Druckenmiller renders an unfavorable opinion of Treasury Secretary Scott Bessent's use of buybacks to defend against higher yields in a market that is functioning normally. "I have spent five decades trading on a simple premise: Markets aggregate information no committee possesses, and prices are how that information reaches decision makers. The long-term Treasury yield is the most important price in the world. It is also the only fiscal disciplinarian the U.S. has left." "Every basis point of artificial yield suppression is a subsidy to procrastination." "Return buybacks to their stated purpose: small, scheduled, off-the-run liquidity operations announced at quarterly refundings, never off-cycle responses to yield levels. Term out the debt honestly and pay the price the market sets." "If the 30-year must trade at 5.5% to clear, that isn’t a crisis. It is an invoice. Then do the only thing that durably lowers long-term yields: address the primary deficit."

Regular reminder there is nothing that unusual about current long-end pricing. Yield spread to overnight rates through thick and thin have averaged higher than they are currently. Yes, it's a stunning reversal from QE/ZIRP negative real rates, but this is just old normal stuff

Building some nice carry across the UST curve with all coupon yields significantly higher than overnight rates. Of course, more enticing now with only 23 bps of hikes priced for the remainder of 2026

Looks like it will be a record breaking August for IG issuance with another 12 firms looking to sell bonds today. Add in more long-end UST auctions this week (20y and 30y TIPS) and the pressure is still on. 30s eyeballing cycle high yields (5.28%)