Pain trade is...up.

An hour of Wolves, and shattered shields.

Who are the buyers to move rates that significantly in such short time span? 🤔 I see TGA balance is virtually unchanged at $974bn so it was not Treasury.

10yr 4.96%

Pray for the rain, gotta deal with the mud.

Bulls are trading the incoming reaction function to the 5.28% 10yr.

Run it back turbo.

Oil -4% ; 10yr to follow

Dark background for the most fun crypto cycle: U.S. runs a $1.9trillion a year deficit, has ~$40trillion of debt, 75% of the budget is mandatory spending and net interest expense. The remaining 25% includes defense which the administration proposing to increase by $500bn to $1.5 trillion. All roads lead to dollar debasement. 10yr 5.17%, 30 year 7.04%. Translation cost of debt is high at the very moment U.S. needs to refinance $10trillion of debt in 2026, 2027. For consumers, interest rates are way too restrictive, leading more lower housing demand, affordability. Oil prices (WTI 92, Brent 102) reflect high uncertainty with 2 wars, adding more costs for consumers. With this backdrop, an unelected body, the Federal Reserve, who lost $194bn dollars last few years, who's mandate is price stability and full employment decided to raise rates higher to control inflation. One can argue a 3rd war is unfolding where there is increase in distrust in the system, nihilism, hatred for people in own country, selective discourse on what is acceptable (example homicide rate in Illinois last 90 days), where the discourse is no longer fringe but becoming mainstream. Some mitigants / good news: Marginal buyer of U.S. debt is U.S banks, and U.S. Treasury outside of Japan, Berkshire, UK hedge funds. But Treasury has the mandate to use the TGA to buy back bonds (does not require congressional approval) to the tune of $300bn, brings TGA balance to "normal" level of ~ $650bn. Unclear why they have not done so yet. Congress can remark gold to current market orice which adds $1trillion to the U.S. balance sheet. Longer project but someone should introduce the bill. Commerce and Treasury should lobby for this hard and fast. 1 or 2 out of the 3 wars likely "end" is some truce after stalemate. Oil/energy prices would come down quickly to perhaps 60-70. Return on AI capex is showing up in corporate earnings which are growing 30%. GDP growing above 4% in 2027 and accelerating is the answer. AI will be massively deflationary.

Order is extremely fragile. Financial markets, society, Good vs evil.

Most fun crypto cycle and its early! Crypto use cases in stablecoins, privacy preserving transactions, store of value, identity, machine to machine payments, digital ownership, etc. will 1000x with the oncoming agentic economy. 💥 Attention on revenue generating protocols while interesting do not necessarily lend themselves to token price appreciation over the arc of this cycle. Narrative still commands pa. Blockchains with instant settlement, frictionless cheap transactions that are built for institutional scale best positioned to benefit. Still early. Few people outside of CT or tech circles know or want to accept what is happening at the cross section of AI, Agentic economy and crypto/blockchain. Few.

Reaction function (to 10yr 5.17%, high Oil prices) underpriced. Only answer now is currency debasement, and AI driven earnings growth, which is now starting to show up in corporate earnings and will likely materially increase 2027-2028.