Analysis of U.S. Treasury Bond Buybacks & All Assets Market Forecasts

By Victor Sperandeo with the Curmudgeon

Behind the U.S. Treasury’s New Bond Buyback Program:

On August 19^th U.S. Treasury Secretary Scott Bessent surprised the debt markets by announcing that the Treasury would at least double the size of its long-term bond buyback operations—increasing purchases from $2 billion to $4 billion per operation—to help lower surging U.S. bond yields and support market liquidity. This move comes with unchecked government spending, budget deficits soaring (without a recession) and total public debt outstanding officially hitting $40.05 trillion this week - doubling its total from less than a decade ago. This rapid escalation occurred just five months after the country bypassed the $39 trillion threshold.

Therefore, Bessent’s new incarnation of the Fed’s 2011 “Operation Twist,” is like putting a band-aid on a 45 Caliber gunshot wound!

Consider these data points:

· Federal spending this year is $600 Billion per month, or $19.9 Billion a day.

· Last month’s (July 2026) budget deficit was $432 Billion!

· Interest alone on the debt is $3 Billion per day – higher that U.S. military spending. With rising interest rates, that amount will surely increase!

In reality, the U.S. Treasury buying $4 billion of long-term bonds was NOT to produce a lower 30-year bond yield, but because they use this process to lower borrowing costs for all maturities, buying a total of $12 billion a month and financing that by selling the same dollar amount of T-bills.

The Treasury's intervention initially triggered a sharp 1-day rally, pulling longer-dated yields down from near two-decade highs. However, the market sentiment quickly reversed course and the 10 and 30-year Treasury yields climbed back to new yearly highs at weeks end.

· The 10-year yield was 4.71% the day before Bessent announced the 30-year buyback. It closed at a NEW high yield Friday at. 4.74%.

· The 30-year yield closed at 5.27% to 5.28% on Friday, which is where it the day before the buyback announcement.

Bessent may have been a very good trader, but he is a terrible government manipulator!

Victor opines that if the intent was to lower long-term yields and control them, then he would need to repeat what ECB Bank President Mario Dragi said on July 26^th 2012… “We will do whatever it takes.”

Victor suggests:

“Bessent cannot possibly be that stupid to think this literal drop in the bucket purchase has any real meaning of controlling long rates! Thereby it means nothing for U.S. government policy!”

U.S. Economy, Mid-Term Elections, and Iran War:

The U.S. economy is slowing down, and inflation (which is creating new fiat currency above the growth rate) is NOT a factor. Refined oil prices (diesel and jet fuel) are going up and are at NEW HIGHS, and this is rippling through the entire economy acting as a brake on growth. It is a “Major Problem Economically and Politically” with 72 days till the November mid-term elections.

Victor: Say goodbye to your favorite GOP elected official!

To say that Trump’s approval rating is at new lows does not really show the worldwide displeasure of him starting the Iran war. The entire world (8.3 billion people) is paying higher prices for food and energy due to this war, which is now 178 days old.

Talk of raising the Fed Funds rate in September (at the next FOMC meeting) means nothing to the Iran Islamic Revolutionary Guard Corps (IRGC) and will have ZERO effect on oil prices. Oil and its refined products are inelastic in demand. Rising fuel prices will only cause consumers to buy less of other products, like groceries.

A great example is WALMART stock (WMT), which dropped -9.15% on Thursday, August 20, 2026, wiping out over $80 billion in market value in its worst single-session decline since May 2022. While the retail giant actually beat Wall Street's expectations for both overall revenue and adjusted earnings, investors aggressively sold off the stock due to underlying growth metrics that signaled a sharp slowdown in the U.S. consumer economy. WMT was little changed on Friday even though it vows to lower prices going forward.

This is the reality of “demand destruction” from higher oil prices, not inflation (which is a monetary phenomenon, as Milton Friedman so eloquently stated and we’ve repeated for years).

Victor stands by his forecast that the 4^th quarter will be down -2% in GDP and the CPI CORE will drop towards the 2% level.

Money Printing, Inflation Metrics and CPI Comparison Numbers:

Printing a great deal more currency (e.g. QE by the Fed or U.S. Treasury) WILL NOT end the Iran war, and so will not lower oil prices or the CPI-U HEADLINE print.

Meanwhile, the Truflation CPI, measuring 15 million prices, is 2.29% as of August 23^rd.

The main difference between Truflation and the BLS headline CPI is in the apparition number of “owners’ equivalent rent,” which is a purely a made up, subjective, fabricated estimate by the BLS. Incredibly, this phony number accounts for approximately 25.85% of the total headline BLS CPI-U market basket. No other nation uses this scam to report prices of shelter/residence.

U.S. Stock Valuation Metrics (Source: Investech Research):

Victor’s Comprehensive Market Analysis and Positioning:

1. The long maturity BOND market has been in a bear market for over 17 ½ years! For example, the 20+ year U.S. bond ETF (TLT) was 103.75 on 12/31/2008, and closed Friday at 82.05. That represents a decline of - 1.33% per year for 17.58 years! This does not include the coupon/interest for that time period. It would show a small profit net before taxes if it were added. The average 10-year coupons were 2.85% and 30-year bonds + 75 bps more.

Victor thinks that U.S. debt securities are making a bottom. He continues to be long 5-year T-Note Futures as an investment which should do very well during a recession.

2. The S&P 500 is + 14.92% compounded in the 17-year seven-month period ending July 2026. Clearly, stock performance has been spectacular at +55.1%above its 83-year trend [1.] LARGE CAP STOCKS WERE +9.62% (IBBOTSON - 2023 SBBI YEARBOOK) during this time period while U.S. debt performance (above 2-year maturities) has been dismal.

Note 1. Since 1926 to 12/31/2008 stocks earned 10.3%. Currently from January 2009 the S&P 500 is doubling every 4.8 years!

Victor firmly believes that the reason why stocks have gone up and bonds down are based on the profit and loss momentum of 17+ years as the FED FAVORS EQUITY HOLDERS. Nonetheless, he says stocks are topping now (as an x-mountain climber, the Curmudgeon is wary of false summits J)

Stocks will decline “if” a recession happens. However, the stock market strongly believes nothing can happen to equities as long as Trump is running the show before the mid-term elections, as he wants the GOP to remain in power and control Congress for his agenda to be carried out. Victor is neutral on stocks. AI stock are in “pause mode.”

3. GOLD and the other precious metals rallied after the U.S. helped to support the Japanese Yen using money creation. Victor is Long both Gold and Silver (the metal, not mining stocks).

4. BITCOIN rallied strongly at the end of the week, mainly due to President Trump helping promote the “CLARITY ACT” passage (which has passed the House and the Senate will vote after the September recess). This legally allows institutions to buy cryptos. These assets currently are now in uptrends. No opinion on Bitcoin or cryptos.

5. The U.S. DOLLAR will continue to decline slowly.

6. ENERGY Complex: Oil prices will continue to trend higher on the assumption that Trump will never admit his blunder in attacking Iran. Thus, the war goes on, and it will cause shortages along with severe economic problems. Oil is bullish, especially diesel (Heating oil) and RBOB (Gasoline).

Victor is very bullish the energy complex, unless Trump TACO’s and exits the Middle East. Iran has effectively won the war. No matter what Trump does the damage to oil and refined products is done. It will cause a recession in Victor’s view. He is a buyer of energy futures on any dip, but the volatility risk due to Trump is very high.

7. COMMODITIES are moving higher in general (with the help of oil). As of August 21, 2026, the year-to-date (YTD) total return for the iPath Bloomberg Commodity Index Total Return ETN (DJP) was ~33.85%, with the closing price for the asset finishing at $50.62.

Victor is bullish on some select commodities and bearish on others.

-Bullish: Copper and Wheat, Gold, and Silver and Sugar.

-Bearish: Palladium, British pound, Canadian $, Livestock, Cotton, Cocoa, & Coffee,

-Lumber and Natural Gas are too low to short as they have declined a great deal already.

8. REAL ESTATE is in decline as evidenced by lumber, which is in a major downtrend. This has to do with the economic slowdown, and relatively high 10-year interest rates. Victor is very bearish on commercial and residential real estate.

9. PRIVATE CREDIT is the canary in the coal mine. It will cause havoc for stocks eventually. The point is that these are illiquid investments that if the US goes into a recession, it will become the worst place to be in the investment community.

DOW THEORY and the Aden Forecast:

Under the Dow’s Theory, for the U.S. stock market to go from a Bull to a Bear market the Dow Industrials must close below the 3/27/26 closing low of 45,166.64, and the Dow Transportation average must close below the May 3^rd 19,605.69 “low in Volume.” Those are well below the current market levels. However, a decline can be extremely fast……

We defer to our good friends (and most loyal readers), the Aden Sisters, on Dow Theory status. Please consider subscribing to their excellent Aden Forecast which is the only one that maintains the late Richard Russell’s Primary Trend Index (PTI) as well as commentary on all the major markets.

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Victor’s Conclusions:

World leadership is in a deep decline. The major western nations have opted to CONTROL the people, and the Politicians are owned by oligarchs, who buy/bribe them, to the degree that liberty is becoming extinct. Short all world leaders, if possible.

In France, I believe far right-wing leader Marine Le Pen will win next APRIL’s presidential elections, despite an appeal court upholding a guilty verdict for embezzlement of EU funds.

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End Quote- WHEN MARKETS ARE WRONG THEY MERELY ADJUST QUICKLY TO NEW NEWS & DATA:

“The stock market is a collection of individual human beings, and human beings are fallible. With almost every stock trade, one person is right and one another is wrong. While the averages do in fact represent the net effect, or “collective wisdom” of market participants’ judgements about the future, history shows time and again that millions of people can be as wrong as one, and the stock market is no exception.”

“The nature of the market simply allows participants to ADJUST and CORRECT their errors RAPIDLY. Any method of analysis that claims the markets are infallible is flawed at its root.”

“Methods of a Wall Street Master” CHAPTER 4, page 34…by Victor Sperandeo.

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Wishing you good health, success and good luck. Till next time………………

The Curmudgeon
ajwdct@gmail.com

Follow the Curmudgeon on Twitter @ajwdct247

Curmudgeon is a retired investment professional. He has been involved in financial markets since 1968 (yes, he cut his teeth on the 1968-1974 bear market), became an SEC Registered Investment Advisor in 1995, and received the Chartered Financial Analyst designation from AIMR (now CFA Institute) in 1996. He managed hedged equity and alternative (non-correlated) investment accounts for clients from 1992-2005.

Victor Sperandeo is a historian, economist and financial innovator who has re-invented himself and the companies he's owned (since 1971) to profit in the ever-changing and arcane world of markets, economies, and government policies. Victor started his Wall Street career in 1966 and began trading for a living in 1968. As President and CEO of Alpha Financial Technologies LLC, Sperandeo oversees the firm's research and development platform, which is used to create innovative solutions for different futures markets, risk parameters and other factors.

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