Oil is up roughly 12% over the past week, hitting a US economy already at full capacity, 4.1% unemployment and payrolls averaging 106,000 a month. That's the kind of shock that turns into services and core inflation rather than fading on its own. Fed funds futures already price an 87% chance of a hike this week. The real question is what happens to the other 75 basis points still priced in after that.

The other supposed backstop already cracked. Bessent had promised to at least double the Treasury's bond buybacks, with the street expecting 5 to 7.5 billion. The first operation only spent 3.6 billion against 10.5 billion of bonds dealers offered, because Bessent wouldn't pay up for the rest. The 30 year yield broke through 5% anyway, and the 10 year touched a level it hasn't held since 2007.

Jonny sits down with Andy Constan, founder and chief investment officer of Damped Spring Advisors and his former boss at Salomon Brothers, to unpack why the sell-off has further to run, why Treasury's own supply games matter more than talk of QE, and why he thinks the real fault line is the private credit funding the AI buildout, not the bond market.

In this episode:
Oil up around 12% last week, landing on an economy at 4.1% unemployment and 106,000 average monthly job growth
Treasury's buyback boost landing at 3.6 billion spent against 10.5 billion of bonds on offer
The 30 year yield through 5% for the first time in years, the 10 year testing a level not held since 2007
An 87% priced chance of a hike this week, and what happens to the other 75 basis points priced in after that
Term premium on the 10 year at 90 basis points, up from minus 50 in the 2020 bubble
Why long dated TIPS look like the better trade than nominal Treasuries right now
Every major bond deal funding the AI buildout, an 80 billion Google raise included, still trading underwater

Jonny has spent 25 years trading macro at the highest institutional level. This is not retail speculation or headline chasing. It is rigorous, independent analysis from someone who has sat at the table.

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0:00 Intro: this week's G7 bond sell-off and rate repricing
0:58 No Elvis this week, and introducing guest Andy Constan
1:55 The three forces behind the sell-off: fiscal, inflation, and hyperscaler issuance
4:46 Oil up 12%, landing on an economy already at full capacity
6:18 The CPI print, and why PCE inflation isn't getting to target this year
7:24 Treasury's underwhelming buyback announcement
9:11 Inside the first buyback operation: 10.5 billion offered, 3.6 billion spent
10:32 The ECB's hawkish meeting, and why the Fed can't afford to lag behind
11:58 The 10 year touching 5% for the first time since 2007
12:23 The 30 year through its cap, and how high it could still go
13:58 How much hiking is priced into the UK, eurozone and US
16:13 Why current yields aren't as extreme as they look against nominal GDP growth
19:04 Andy Constan: why the Fed has boxed itself into a corner
23:24 How much of the global hiking cycle is already priced in
25:14 Why the dot plot probably won't match what's priced into the curve
27:25 What actually moves the long end: growth and inflation expectations, not supply
28:20 Term premium then and now, and the case for long dated TIPS
30:23 Treasury's buybacks, the November refunding deadline, and Bessent's Yellen U-turn
37:06 The hedge: foreign stocks, gold, and a short dollar
38:10 Why equity valuations hinge on earnings expectations that may not hold
42:51 Every major AI-linked bond deal still trading underwater

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Buybacks Fail to Slow Bond Bloodbath | ft. Andy Constan of Damped Spring Advisors

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