Warsh put the six-month annualised PCE rate at 4.1% against 3.7% over twelve months, and said 54% of components are rising above 3%. September hike odds jumped from 35% to 57%.
Japan holds $1.203 trillion of U.S. Treasuries and has just stopped needing them. Its own 10-year now pays 2.90%, more than a hedged American one, and mortgages price off the curve it walks away from.
July PCE came in at 3.7% against a 3.6% forecast, December rate-hike odds now run above 70%, and the Treasury is doubling bond buybacks anyway. Warsh speaks at Jackson Hole at 8:00 Friday morning.
The Supreme Court struck down the IEEPA tariffs in February and $86.3 billion in refunds is already cleared for payment. On Saturday a 1930 statute nobody had used in seventy years put 50% duties on $20 billion of Canadian goods.
Bessent promised an economic D-Day, then declined to touch Chinese banks: “Why would I want to blow up the global financial system?” Brent fell 1.9%. Gold is up 36% in a year.
Federal debt crossed $40 trillion for the first time last week. The Treasury had to bid for its own bonds, yields rose anyway, and bitcoin jumped more than 23% while gold closed at $4,590.
The Treasury’s Wednesday buyback pulled the 30-year yield down about 10 basis points. By Thursday it was back near 5.25%, giving back roughly half that relief, while Walmart shares fell 9% on slowing U.S. sales.
The Treasury doubled its long-bond buybacks Wednesday, from $2 billion to $4 billion per operation, and the 30-year yield fell 7.8 basis points within hours. Gold is already up more than 10% in three weeks on falling rate-hike odds.
Semiconductor stocks fell 5% Tuesday and Oracle’s credit rating has already been cut to one notch above junk. The trigger wasn’t tariffs. It was $1.65 trillion in hyperscaler debt the balance sheets don’t fully show.
The Strategic Petroleum Reserve fell to 298.7 million barrels last week, the lowest since 1983, while the 30-year Treasury yield closed at 5.31%, its highest since 2007. The two numbers share one cause.
July retail sales fell 0.6% to $763.6 billion, ending five straight monthly gains, while August sentiment printed 51.0. New York factories reported input prices at 58.6 against selling prices of 22.7.
July producer prices were unchanged, yet the narrowest core measure rose 0.4% and the twelve-month rate held at 4.7% against a 3.4% CPI. Hours later the 30-year bond sold at 5.216%.
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