Super-Macro Management

Tech credit default swaps have doubled from 50 to 100 basis points, Meta's free cash flow has just turned negative, and French spreads to Germany are back at European debt crisis levels. Four of the G7 central banks meet this week, and the market is trying to decide whether this is the end of the AI bull market or just the first real test of who gets to borrow.

The bigger thread is the competition for capital. Net equity issuance was negative for two and a half decades, then turned sharply positive in the last two quarters. Add heavy corporate bond supply and governments running deficits of 5.5 to 6%, and everyone is queuing up for the same investors.

Elvis and Jonny Matthews unpack why the AI build out is pushing up the cost of capital, what the French bond blow-out means for Europe, and why the central banks are likely to hold now and signal a hike in December. You may also notice that Jonny isn't in our usual London studio this week, instead he's joining us remotely from Vegas.

In this episode:
Why Jonny closed his S&P 500 put spreads and does not think the AI bull market is over
Neo cloud stress: shares roughly half their summer level and bonds at 80 cents on the dollar
Hyperscaler free cash flow turning negative as Meta lifts capex guidance to 135 to 145 billion
Jevons Paradox in AI: token prices falling while corporate spend grows 300 to 500% a year
Tech sector five year CDS doubling from 50 to 100 basis points
Net equity issuance, bond supply and sovereign borrowing all competing for the same capital
French ten year spreads to Germany, and why Jonny and Elvis disagree on Le Pen and the election
The Fed, Bank of Canada, ECB and Bank of Japan all expected to hold, with a December hike on the cards

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.

New to SuperMacro?
Get 30 days of our Daily Note entirely free at www.super-macro.com

0:00 Cold open: will France's problem stay isolated?
0:26 Welcome, with Jonny in Las Vegas
1:10 Is this the end of the AI bull market?
2:05 Neo cloud stress: shares halved, bonds at 80 cents
3:17 Hyperscaler free cash flow turns negative
4:11 Meta lifts capex guidance to 135 to 145 billion
5:04 Cost of capital and the return on AI spend
5:35 Jevons Paradox and surging token usage
7:08 Ramp data: AI spend per employee
7:54 Will the neo cloud problems spill over?
8:15 Tech CDS doubling from 50 to 100 basis points
9:04 Governments and companies competing for capital
10:02 Net equity issuance turns sharply positive
11:26 Why yields have to stay higher
12:08 $1 trillion of AI spend, around 3% of GDP
13:42 The French sovereign debt blow-out
14:32 Spain and Italy: why they look healthier
15:26 Moody's, the French budget and the 2027 outlook
16:01 Elvis and Jonny disagree on France and the ECB
17:00 Le Pen and the election
17:55 Net debt to GDP against bond yields
19:27 Hot inflation prints and PPI leading CPI
19:52 Fed, BoC, ECB and BoJ expected to hold
21:01 Are the October meetings a nothing? Warsh and Fed guidance
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The US Treasury is buying back $4 to 6 billion of long dated bonds at a time, against $5.4 trillion outstanding and $900 billion of new issuance every year. Jonny calls it a pea shooter pointed at a battleship. Bonds made last week’s front cover of The Economist, a cover with a record of marking turns. When everyone is suddenly worried about the long end, where does it go next?

The real test is the 4 November refunding. If the Treasury cancels the 20 year auction or trims the tens and thirties, the first reaction could be a rally, but the paper still has to go somewhere, and Jonny expects it to flood into bills and tie funding more tightly to the Fed. Add Judy Shelton and her proposal for gold backed Treasury bonds, and debasement fears are never far away.

Elvis sits down with veteran macro trader Jonny Matthews, 25 years of institutional experience at Brevan Howard and Citigroup, to unpack why a relief rally in long bonds is one to sell, what the Treasury could still do at the November refunding, and why he is buying gold upside while staying short the long bond.

In this episode:
Why the ten year and thirty year are consolidating, and the risk of a 6% handle on the long bond
The Economist cover asking whether bonds will blow up, and oil at $10 a barrel in 1999
Why $4 to 6 billion buybacks barely dent $5.4 trillion of 10 to 30 year debt
What the 4 November refunding could change, and why bills would absorb the difference
Judy Shelton’s zero coupon Treasury bonds backed by gold, 261 million ounces at $42 an ounce
Why nominal GDP outgrowing the interest rate cuts debt to GDP, and why low inflation is not coming back
Zillow and Apartment List rents turning up, vacancies falling and mortgage rates at 7.5%
Why he is buying gold upside and selling Treasuries into strength

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.

New to SuperMacro?
Get 30 days of our Daily Note entirely free at www.super-macro.com

0:15 Welcome, and what Super Macro offers
0:41 Where the ten and 30 year yields stand after the sell-off
1:09 Bonds make the cover of The Economist
2:10 Why Jonny isn’t ready to buy bonds yet, and the risk of 6% on the long bond
2:34 Events that could squeeze bonds, starting with the Treasury buybacks
3:40 The maturity profile of the debt and the $5.4 trillion buyback target
4:44 The 4 November refunding announcement and what Treasury could do
6:24 Why cutting long end supply would be a chance to sell
7:06 Bill issuance, debasement fears and pressure on the Fed
8:31 The two new Treasury advisers
11:33 Judy Shelton and her plan for gold-backed Treasuries
12:33 The US gold stock, valued at $42 an ounce
14:09 How much power the advisers really have
14:50 Inflating away the debt with nominal GDP growth
15:58 Why the era of ultra low rates is over
16:43 Core inflation and the risk from rents
17:15 The rent indices that lead the CPI
18:25 Why rental disinflation is fading fast
20:26 Why Jonny is buying upside in gold and staying short Treasuries
21:05 Wrap up and what subscribers get in the Daily Note Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com
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France's deficit is heading for 5.4% this year, the government's plan to cut it to 5% is unlikely to survive the National Assembly, and a presidential election lands in April. French yields keep climbing, the two year Bund now yields 175 basis points less than Treasuries, and the VIX hasn't moved. The Nasdaq hit an all time high on Friday.

Jonny called the ten year breaking through 4.5% months ago, and it has been a great year for his short. Now he has scaled back. Options protection has become expensive as the MOVE index surges, and with only about five basis points of a hike priced for November fed funds, he is leaving the October Fed meeting alone.

Elvis sits down with veteran macro trader Jonny Matthews, 25 years of institutional experience at Brevan Howard and Citigroup, to unpack why the French deficit is dragging Europe's bond markets lower, why Jonny has cut his Treasury short, and why equities still aren't flinching at higher yields.

In this episode:
France's 5.4% deficit, a reduction plan to 5% that is unlikely to pass, and an April presidential election with Le Pen and Melenchon leading
Japanese yields rising fast enough to close the yield pickup that once sent JGB investors into Treasuries and European bonds
Two year Bund yields falling 175 basis points below Treasuries as investors rush into the safe haven
Why Jonny has scaled back his ten year short, and why a surging MOVE index makes options protection so expensive
November fed funds pricing just five basis points of a hike, and why Jonny won't trade the October meeting
Q3 S&P 500 earnings growth expected near 30%, and why the VIX has not moved
Why hedge funds have a ton of information but not necessarily better information, and how Jonny forms his own views

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.

New to SuperMacro?
Get 30 days of our Daily Note entirely free at www.super-macro.com

0:00 Cold open: are France's presidential candidates really extremists?
0:13 Welcome back, Elvis is fresh from Las Vegas
0:53 The ongoing bond sell-off and the rise in French yields
1:33 France's 5.4% deficit and an April presidential election
2:32 Why yields are rising: inflation, strong growth and second round risk
4:29 Japan's bond market and the vanishing yield pickup
5:14 Is Europe facing the same problem?
6:03 Why Jonny has scaled back his ten year Treasury short
7:55 Why options protection is so expensive: the MOVE index
8:31 Why the VIX hasn't moved
9:40 How Jonny holds up against hedge funds with more information
13:01 Jonny's Fed funds trade, and why he is sitting out October
15:38 Political risk in Europe and fears of a new sovereign debt crisis
16:58 Bunds as a safe haven, the 175 basis point spread and the euro
18:44 Why Jonny runs a low capital trading strategy
20:38 Equities: why stocks are shrugging off higher yields
22:11 How narrow the rally is, and the AI capex risk
23:13 Wrap up and what the Daily Note offers
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The 30 year Treasury yield traded above 5.5% this morning. The 10 year is now clean through 5%, a level that held as a ceiling for two years. Whatever was capping yields broke last week, and Jonny doesn't think it's coming back.

Behind the move sits a US economy still running hot. The Atlanta Fed's GDPNow estimate has Q3 growth tracking at 5%, powered by consumption growth above 3% and an AI-driven investment boom, with last week's S&P Global composite PMI printing its strongest read yet. The case for bonds staying cheap keeps getting harder to dismiss.

Jonny walks through why the bond market's multi-year ceiling finally gave way, what a botched auction and a shrunken buyback programme reveal about real demand for Treasuries, and why he thinks the neutral rate of interest has reset permanently higher.

In this episode:
The 10 and 30 year yields breaking through levels that had capped them for two years
A 5 year note auction with the biggest tail in almost five years and the lowest bid to cover since 2018
The Treasury's buyback operation managing just over $4 billion of face value against $5.4 trillion outstanding in the maturities it targets
Atlanta Fed GDPNow tracking Q3 growth at 5%, with consumption growth above 3% and investment spending on an AI-driven tear
US federal debt to GDP above 120% once the Fed's own holdings are counted, and why the Fed itself is losing money on that stock
Italy's BTP-Bund spread down from over 400 basis points in 2012 after cutting its deficit toward 3% of GDP, while France's OAT now yields more with its own deficit at 5.4%
Why a strong labour market raises the risk that higher energy costs turn into second round wage and price effects

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.

New to SuperMacro?
Get 30 days of our Daily Note entirely free at www.super-macro.com

0:00 Intro: why fiscal concerns finally start to matter
0:22 Welcome, and why last week was a great week to be bearish bonds
0:55 The multi-year ceiling on 10 and 30 year yields finally breaks
1:43 What actually drives bond yields, and the factors behind last week's move
2:53 Inflation, a healthy labour market, and the risk of second round effects
4:02 Why fiscal concerns matter once they start to matter
4:56 Italy's 2012 sovereign debt crisis and the BTP-Bund spread
5:55 France's 5.4% deficit and a gridlocked election
6:24 French bonds now yield more than Italian bonds
6:52 The US debt trajectory, and why the real debt to GDP ratio is over 120%
7:44 How the Fed's own balance sheet is losing money on its bond holdings
9:08 Retail sales, consumption growth, and a red hot AI investment boom
10:01 Breaking down the Atlanta Fed's 5% GDP tracking estimate
11:37 A surprisingly strong S&P Global PMI print
13:13 A brutal five year note auction, and the worst demand in years
15:37 Why Treasury's buyback operation fell short of even its own promise
17:42 The buyback in context: $4 billion against $5.4 trillion outstanding
19:12 The bottom line: the neutral rate of interest has reset higher
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The Fed hiked 25 basis points last week, and the market's answer was to rally. The S&P is up 3.5% since the meeting, the Nasdaq 4.5%. Retail sales control group spending jumped 1.4% in August against a forecast for half a percent. Whatever that hike was meant to do, it isn't slowing anything down yet.

That isn't the story everywhere else. The BOJ's own hawks are on their way out. Two doves have already been appointed and the two remaining hawks will end up being replaced by more doves. The Bank of England held rates, even with more energy driven inflation coming in October and January, because the UK labour market has been shedding jobs for almost two years and there's no second round effect to fear.

Jonny walks through why this hiking cycle won't be a coordinated one like 2022, why the Fed still has room to go further than its G10 peers, and why US households have never been in better shape to keep spending through it.

In this episode:
Only the RBA has hiked more than once this cycle, while the BOJ, Fed and ECB all move at very different speeds
The BOJ's newest board members dissenting against a hike days after taking their seats, and why the doves are about to take control
Less than 5 basis points priced for the BOJ's October meeting
UK payroll jobs shrinking for most of the last two years, with two more energy price hikes still coming in October and January
Retail sales control group spending up 1.4% in August against a forecast for half a percent
Household wealth to income at an all time high, and debt to disposable income at a two decade low
Real fed funds rate only just turning positive, and why Jonny thinks the Fed has another 50 to 100 basis points to go

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.

New to SuperMacro?
Get 30 days of our Daily Note entirely free at www.super-macro.com Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com
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advertising.

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.

New to SuperMacro?
Get 30 days of our Daily Note entirely free at www.super-macro.com

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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There is a generation of bond traders who have never seen yields this high, levels they would have dreamt of five years ago. The US deficit is running at 5.5 to 6% of GDP with the economy nowhere near a recession, and there is no political will in sight to fix it. That combination alone isn't the buy signal it looks like.

Two live risks sit in front of this call. Wednesday brings the Treasury's buyback announcement, and Bessent has already said he will at least double the size, with room to go further. Friday brings the CPI print that Fed chair Kevin Warsh has effectively staked his credibility on, after reversing from downplaying inflation in July to calling the 2% target non negotiable at Jackson Hole.

Elvis sits down with veteran macro trader Jonny Matthews, 25 years of institutional experience at Brevan Howard and Citigroup, to unpack why he isn't rushing to buy bonds despite the highest yields in a generation, what August's payrolls really mean for the Fed, and why Japan's own hawkish pivot is a warning against betting on long yields falling.

In this episode:
Why elevated yields reflect strength as much as strain, and the three forces, inflation, fiscal discipline and corporate supply, keeping them there
The US deficit at 5.5 to 6% of GDP, with next to no political will to close it
Nominal GDP running near 8%, and why Treasury yields still have catching up to do
August's payrolls: a 106,000 six month average against the 30,000 to 35,000 needed just to hold unemployment steady
Why the case for rent disinflation may already be stalling, against Fed governor Waller's dovish read
PCE inflation above target for 64 straight months, with services alone contributing 2.5 percentage points
Why the Fed's September decision now hinges almost entirely on Friday's CPI print
What Japan's hawkish pivot did to its yield curve, and why it's a warning against being short long bonds

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.

New to SuperMacro?
Get 30 days of our Daily Note entirely free at www.super-macro.com

0:00 Intro: do we buy bonds
0:51 The framing question, and why high yields alone don't mean buy
1:19 The three forces keeping yields elevated: inflation, fiscal discipline, corporate supply
2:50 Why higher yields reflect strength, not a debt doom loop
3:17 The deficit and debt to GDP since Clinton, the GFC and the pandemic
4:19 The 5.5 to 6% deficit, and why there's no political will to close it
4:54 Nominal GDP against the ten year yield, and the catching up still to do
6:32 Interest costs creeping from 3.5% to 4.5% of GDP
8:02 Entitlement spending, and Europe's worse position
9:44 This week's risks: Wednesday's buyback announcement and Friday's CPI
11:17 The yen, the BOJ's hawkish pivot, and Bessent's swap facility theory
13:12 Nonfarm payrolls: the call that played out, and cyclical versus non-cyclical jobs
15:08 The 106,000 six month average, and what it means for unemployment
17:31 PCE inflation, Warsh's reversal since Jackson Hole, and 64 months above target
20:31 Break even inflation at 2.4%, and the Fed's single data point trap
22:10 Waller's dovish dissent, and why rent disinflation may already be stalling
24:04 What Japan's yield curve just did, and why it's a warning on short bonds
26:01 Wrap up: still cautious, and the trade into September

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US interest costs have quietly climbed to around 18% of tax revenues, up from about 5% not long ago. At Jackson Hole, Fed chair Kevin Warsh delivered what looked like a near 180 degree hawkish pivot from his July meeting, sending the two year yield up 11 basis points in a day. The long end barely moved.

Jonny thinks the pivot has less to do with inflation than pressure from the Treasury. Scott Bessent has been doubling bond buybacks and hinting at drawing on the $950 billion TGA to support long dated debt, and the two men meet weekly. A short end hike buys Bessent room to defend the long end without spending the Treasury's own firepower.

Elvis sits down with veteran macro trader Jonny Matthews, 25 years of institutional experience at Brevan Howard and Citigroup, to unpack why the long end didn't budge despite the hawkish pivot, what a September hike really says about debt sustainability, and why he still likes gold and short bonds as the trade.

In this episode:
Warsh's near 180 degree reversal, from downplaying inflation in July to calling 2% a "firm fixed target" at Jackson Hole
The two year yield jumping 11 basis points on the day, while the long end stayed exactly where it was
Fed funds futures pricing close to 90% odds of a September hike, up from around 60% before the speech
Why Jonny expects Friday's payrolls to beat the 55,000 consensus, after a seasonal 50,000 drop in government jobs last month
The 30 year Treasury yield at 5.25%, driven mostly by rising real yields rather than inflation
Break even inflation at 2.4%, up from a well anchored 2%, a sign of fiscal risk over price risk
Why shifting issuance to the short end risks repeating what happened in Turkey's bond market
Interest costs near 18% of tax revenues, and why debt sustainability is now a G7 wide problem, not just a US one

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.

New to SuperMacro?
Get 30 days of our Daily Note entirely free at www.super-macro.com

0:00 Intro: did Warsh just kill the debasement trade
0:50 Warsh's hawkish pivot at Jackson Hole, and the 180 from July
1:53 Bessent's TGA hint, the doubled buybacks, and mixed signals from the Fed
3:17 The political trade off: a short end hike to save the long end
3:54 Line by line: what changed between July and Jackson Hole
6:04 Why short term rates are a blunter tool than they used to be
7:18 The labour market case: stable claims and the high frequency data
9:19 Why Jonny expects Friday's payrolls to beat the 55,000 consensus
11:12 The committee split, and fed funds futures pricing near 90% odds of a hike
13:36 December's dot dispersion, and whether it's one hike or two
14:24 Can the economy handle a 50 basis point hike
16:17 Why hiking still won't bring the long end down
17:01 The real driver of long yields: debt sustainability, not inflation
18:11 Break even inflation at 2.4%, and the purchasing power problem
21:27 Shifting issuance to the short end, and what happened when Turkey tried it
23:44 The chart showing fed funds and the 10 year yield decoupling
24:40 Borrower or lender: the devaluation bet, and the trade Jonny holds
28:14 Wrap up: interest costs at 18% of tax revenues, and the G7 wide problem

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The US national debt passed $40 trillion last week. Scott Bessent's response was to double the Treasury's bond buybacks, from $2 billion a time to $4 billion. Against $5.6 trillion of debt maturing in the 10 to 30 year bucket alone, that is roughly $100 billion a year, a fraction of what is actually coming due.

Elsewhere, Bessent has sold euros to buy yen to stop Japan selling Treasuries, tapped the TGA to help fund the buybacks, and signalled in the August refunding statement that future issuance will lean towards bills rather than long bonds. Each move buys time. None of them fixes the underlying arithmetic.

Elvis sits down with veteran macro trader Jonny Matthews, 25 years of institutional experience at Brevan Howard and Citigroup, to unpack why Bessent's interventions are too small to move the market, what shifting issuance to the short end actually risks, and why he still expects yields to go higher.

In this episode:
The $40 trillion debt milestone, and why Bessent's "publicly traded" caveat is disingenuous
Treasury buybacks doubling to $4 billion a time, still a drop in the ocean against $5.6 trillion maturing in the 10 to 30 year bucket
The TGA explained: the Treasury's checking account at the Fed, currently around $1 trillion
Why the yen intervention and swap facility increase is not QE, whatever it looks like
The August refunding statement's hint that long bond issuance is capped, with funding shifting to the short end
Fiscal dominance, and how short dated debt makes the Treasury hostage to the Fed's rate decisions
Mandatory spending rising from 14.2% to 15.5% of GDP by 2036, with interest expense following from 3.3% to 4.6%
The 30 year Treasury yield at 5.24%, and why the Volcker disinflation shows yields can stay high long after inflation falls

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.

New to SuperMacro?
Get 30 days of our Daily Note entirely free at www.super-macro.com

0:00 Intro: last week's Treasury sell-off and the $40 trillion debt milestone
1:23 Bessent's response, and why it's more smoke and mirrors
2:36 Clip: Bessent on the $40 trillion mark, and why "publicly traded" debt is misleading
5:11 US debt to GDP against Italy and Japan
6:27 Mandatory spending and interest costs rising to 2036
7:42 The yen intervention and the swap facility
8:13 Treasury buybacks: $4 billion a time against $5.6 trillion maturing
10:12 The TGA explained
12:31 Shifting issuance to the short end, and the refunding statement's hidden signal
14:17 Where this goes wrong: debt monetisation and fiscal dominance
16:16 Yield curve control despite a strong economy
18:32 Other levers: bank regulation, the GSEs, and shrinking foreign demand
20:20 Is the dollar's reserve status in question
21:36 A crowded field: global sovereign yields at multi-year highs
23:14 Midterms, entitlement reform, and the UK's Liz Truss playbook
24:50 30 year yields against CPI since Volcker
26:49 Can the US afford to stay in Iran, or walk away
29:02 Wrap up and where to find the Daily Note Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com
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The data all pointed one way last week. Payrolls missed, CPI and PPI came in benign, retail sales underwhelmed across every single aggregate. Sovereign bonds caught a bid, then sold off almost immediately. When bonds cannot rally on their own good news, the problem is not the data.

The US interest bill has now overtaken the defence bill. Niall Ferguson's law says any great power that spends more on debt servicing than defence risks ceasing to be a great power, and the US is running a deficit of 5.5 to 6% at full employment with unemployment at 4.1%. There is no reform coming, in any G7 country, because nobody is going to vote for it.

Elvis sits down with veteran macro trader Jonny Matthews, 25 years of institutional experience at Brevan Howard and Citigroup, to work through why the long end sold off into weak data, what the deficit does when the economy finally turns, and why he is still short treasuries.

In this episode:

Why sovereign bonds sold off into a weak payrolls print, benign inflation and soft retail sales

G7 debt to GDP ratios, and the US on track to pass Italy from over 120%

Japan cutting 220% to 200% with no reform at all, just nominal GDP running above the interest rate

A 6% deficit at full employment, and where it goes in even a mild recession

Ferguson's law: the interest bill has passed the defence bill, and neither one is coming down

AI capex arriving in the bond market as a new and very large competing issuer

Ten years of long dated treasury total return below zero while CPI rose 40 to 45%, and what that does to the 60/40

Why TIPS at 2.4% on the ten year and 3% on the thirty look like the better bet

4.5% on the ten year and 5% on the thirty now acting as a floor rather than a ceiling

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.

New to SuperMacro?

Get 30 days of our Daily Note entirely free at www.super-macro.com

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US payrolls fell by 23,000 in the latest print, with over 100,000 of downward revisions to the previous two months — and yet Treasury yields climbed. When bond markets rally on bad news and then give it all back, something deeper is going on.

Meanwhile, the much-publicised coordinated intervention to support the Japanese yen — complete with a conveniently photographed "buy yen" note on the Treasury Secretary's desk — may be far less than it appears. And with Japanese government bond yields hitting two-decade highs, the pressure on Tokyo is building fast.

Elvis sits down with veteran macro trader Jonny Matthews — 25 years of institutional experience at Brevan Howard and Citigroup — to unpack why the Treasury market shrugged off a weak jobs report, what the US–Japan yen intervention is really designed to achieve, and why the long end of the bond market in both countries is flashing red.

In this episode:

Why Treasury yields rose despite a negative payrolls print — and what a shrinking labour supply means for wages and inflation

The unemployment rate at a 13-month low of 4.1% even as jobs are lost — the retiring boomers and net-zero migration story the headlines miss

Bessent's "whatever it takes" moment: the leaked to-do list, the Exchange Stabilization Fund, and why this intervention is more theatre than firepower

Japan's high nominal GDP playbook — inflating away a 200% debt-to-GDP ratio while JGB yields hit two-decade highs — and the 1992 sterling lesson for anyone defending a currency

Why 4.5% on the 10-year and 5% on the 30-year now look like floors rather than ceilings — and the asymmetric risk around this week's CPI print ahead of September's Fed meeting

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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In this episode of the Super Macro podcast, hosts Elvis and Jonny Matthews delve into the pressing topic of tariffs and their impact on the economy. Jonny, who has been skeptical about the likelihood of a recession, discusses how current tariff policies are slowing growth, increasing prices, and disrupting global supply chains. The episode highlights the significant decline in business and consumer confidence, with companies putting hiring and capital expenditure plans on hold due to uncertainty. Jonny also emphasises the potential negative effects on household wealth and consumer spending if the stock market continues to decline. The conversation reveals that the real concern for CEOs may not just be the tariffs themselves but the unpredictability and abrupt changes in policy that could disrupt long-term business strategies. Tune in for an insightful analysis of the current economic climate and what it means for the future. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com
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In this episode of the Super Macro podcast, hosts Elvis and Jonny Matthews return after a brief hiatus to discuss economic projections for 2025. Johnny emphasises his confidence in the economy for the first half of the year, highlighting strong household and corporate balance sheets, alongside a robust job market. The conversation also touches on Johnny's successful year managing a portfolio for Fortum Capital, crediting his research and content creation for the impressive returns. Listeners are invited to subscribe to the Super Macro newsletter for insights and analysis, with a special offer for a free one-month trial. The episode sets the stage for future discussions, including the potential impact of political changes on the economy. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com
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In this episode of the Super Macro podcast, hosts Elvis and Jonny Matthews dive into the recent economic performance of Ireland, discussing the optimistic outlook for the third quarter. Jonny highlights strong consumer spending trends, projecting a 3% growth rate and an overall GDP growth of around 2.5% for the quarter. They address previous concerns about consumers depleting their savings, revealing new revisions to national accounts that indicate higher household income than previously estimated. Jonny emphasizes the importance of these insights for understanding the current economic landscape and future expectations. Tune in for an in-depth analysis of these trends and their implications for the economy.

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In this episode of the Super Macro podcast, hosts Elvis and Jonny Matthews delve into the current market dynamics and the prevailing economic outlook. Jonny stands firm in his belief that a recession is unlikely, despite increasing skepticism in the market. He emphasizes the importance of maintaining a non-consensus view to capitalize on investment opportunities. The discussion shifts to the Federal Reserve's recent actions, particularly focusing on the dovish stance reflected in the changes in the two-year yield around FOMC meetings since March 2022. Jonny presents a detailed analysis of the trends in interest rates, illustrating how the Fed's projections and actions have influenced market reactions. Tune in for valuable insights on navigating the complexities of today's economic landscape.

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In this episode of the Super Macro Podcast, hosts Jonny Matthews and Elvis delve into the current market dynamics and the looming recession narrative. Jonny shares insights on the disparity between market pricing and economic realities, particularly focusing on the rates market. He highlights that the market is pricing in approximately 275 basis points of cuts over the next 15 months, which he argues signals a deep recession—a scenario he believes is unlikely based on current economic conditions. The discussion emphasizes the differences between today's corporate sector and that of the past, noting that companies are now less leveraged than during the 2007-2008 financial crisis. Jonny maintains his conviction that the Federal Reserve will not cut rates as drastically as the market anticipates, presenting a contrarian viewpoint that challenges prevailing market sentiments. Tune in for an engaging analysis that questions the market's recession pricing and explores the broader economic context.

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In this episode, Jonny Matthews and Elvis discuss the recent weak CPI print and its implications on the economy. They analyze the job market, highlighting the contrast between cyclical and non-cyclical sectors. Johnny emphasizes the significance of real disposable income growth and strong private sector wages. Stay tuned for a special guest, Andy Constand, joining the conversation later in the episode.

Timestamps:
00:00:00 - Introduction and Welcome
00:00:11 - Discussion on the Economy and CPI Print
00:00:57 - Analysis of Payroll and Job Sectors
00:01:30 - Real Disposable Income and Consumer Spending
00:02:37 - Household Wealth and Economic Outlook
00:03:37 - Market Reactions: Bonds Up, Equities Down
00:04:13 - Johnny's Year-to-Date Performance
00:04:42 - Subscription Information for SuperMacro
00:05:09 - Introduction of Special Guest Andy Constan
00:06:10 - Andy's Market Call in October/November
00:07:04 - Treasury Issuance and Market Reactions
00:08:08 - Fed's Dovish Stance and Market Impact
00:09:51 - Financial Conditions and Equity Market
00:11:07 - Recent Economic Data and CPI Print
00:12:18 - Sector Performance and Market Rotation
00:13:14 - Economic Slowdown and Rate Cuts
00:15:02 - Potential Economic Bounce and Treasury Market Outlook
00:16:03 - Financial Conditions and Fed's Influence
00:18:01 - Household Wealth and Consumer Behavior
00:19:04 - Labor Market and Fed's Potential Rate Cuts
00:20:00 - Impact of Financial Conditions on the Economy
00:22:47 - Bonds vs. Equities Valuation
00:23:19 - Fiscal Deficit and Treasury Issuance
00:26:03 - Fed's Policy and Inflation Control
00:28:06 - Treasury's Issuance Strategy
00:30:34 - Long-term Debt Issuance Strategy
00:35:21 - Term Premium Expansion and Asset Impact
00:35:40 - Political Aspects of Treasury Issuance
00:36:07 - Andy's Favorite Rock Bands
00:37:20 - Andy's Updated Top 5 Rock Bands
00:37:50 - Where to Find Andy's Work and Subscribe

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On this episode of Super Macro, Elvis and Jonny discuss the recent subpar economic data in the United States and its implications for Fed policy. They analyze charts showing the softening data against Treasury yields and the S&P, noting the disconnect between the S&P's strong performance and weakening economic indicators. Tune in to gain insights into the economic surprise index and what this shift in data trends could mean for the future.

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In this episode of the Super Macro Podcast, hosts Elvis and Jonny Matthews are joined by special guest Joseph Wang, also known as the Fed guy. Joseph, a former senior trader on the New York Open Markets Desk, shares his insights on the evolution of the Fed, the impact of quantitative easing, and predictions for the future of the economy. The discussion covers topics such as the Fed's role in the financial system, the potential for rate cuts, and the implications of fiscal deficits on asset prices. Tune in to gain valuable insights from Joseph's expertise and stay informed about the latest trends in the financial sector.

00:16 - Introduction and Guest Introduction
00:27 - Joseph Wang's Background
01:28 - Evolution of the Federal Reserve's Role
03:29 - Central Banks and Climate Change
04:35 - Bank of England's Performance Review
05:27 - Skepticism on QE Benefits
08:04 - Impact of QE on Asset Prices
09:11 - Fed's Approach to Balance Sheet Reduction
13:43 - Treasury Buyback Operations
15:25 - Fed's Understanding of Neutral Rate
19:02 - Market Expectations for Fed Rate Cuts
23:20 - Predictions for the Year: Economy and Markets
27:07 - Gold Price Prediction and TIPS as Inflation Hedge
30:14 - Joseph's Predictions Revisited
32:43 - Performance of Johnny's Portfolio
35:17 - How to Subscribe to the Super Macro Podcast Note
36:09 - Wage Growth and Services Inflation
40:49 - SOFR Futures as a Trading Opportunity
44:14 - Closing Remarks and Future Podcast Announcements

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