US Treasury will buy back $69,000,000,000 of its own debt over the next 90 days.
Source: The Macro Paper
Prediction markets are bigger than stock trading with some brokerages.
Source: Wall Street Mav
Treasury Secretary Scott Bessent is reportedly urging the Federal Reserve to expand support for Japan, allowing it to raise dollars without selling its massive holdings of US Treasuries.
Japan owns roughly $1.1 trillion in US government bonds. When it intervenes to support the yen, it needs dollars. Once its cash reserves are depleted, selling Treasuries becomes the most direct way to fund further intervention. That is a problem for the US. Large Treasury sales would increase bond supply, pushing prices lower and yields higher. With the 10-year Treasury yield recently climbing above 4.7%, Washington has strong incentives to avoid additional upward pressure. The solution is the Fed's FIMA Repo Facility. It allows foreign central banks to temporarily exchange Treasuries for dollars without selling the bonds into the market. Japan receives dollar liquidity, then later repays the funds and takes back its securities, leaving the bond market largely unaffected. The challenge is capacity. The facility is currently capped at $60 billion per day, while Japan is estimated to have spent $60–80 billion supporting the yen in just one week. According to reports, Bessent wants that limit increased. However, expanding the facility would require approval from the Federal Open Market Committee (FOMC), and the Federal Reserve has so far declined to comment. Source: Bull Theory
The market broadening in one chart
The S&P 500 Equal-weight index $SPY just hit new all-time high while the Nasdaq 100 $NDX is still over 8% below highs. Source: Bloomberg, RBC
S&P 500 profit margins spiked to 16.7% in Q2, which is by far their highest level in history.
“Profit margins are probably the most mean-reverting series in finance, and if profit margins don't mean revert, then something has gone badly wrong with capitalism. If high profits don't attract competition, there's something wrong with the system.” - Jeremy Grantham Charlie Bilello
US manufacturing is booming, expanding at the fastest pace since 2022 and beating expectations in many metrics for the month of July.
Omar Sharif of Inflation Insights points out that the ISM production index rose by the most for any July since 1951. Source: Lisa Abramowicz
The US just stepped in to support Japan's currency—without selling dollars
The US Treasury reportedly bought Japanese yen for the first time since 2011, funding the move by selling euros rather than dollars. The goal: help stabilize the yen while avoiding downward pressure on the US dollar. Why does this matter? Japan owns about $1.19 trillion in US Treasuries, making it the largest foreign holder. If the yen weakens too much, Japan may need to sell Treasuries to raise dollars and defend its currency. More Treasury selling can push US bond yields higher, increasing borrowing costs across the economy—from mortgages to auto loans. Japan can also tap the Fed's FIMA Repo Facility, allowing it to borrow dollars against its Treasury holdings instead of selling them outright. That could reduce pressure on the US bond market. Reports suggest the US and Japan may announce a coordinated currency policy in the coming days. Source: Hedgie
The Nasdaq just posted its worst July in 22 years
The Nasdaq-100 fell 6.6% in July, while semiconductor stocks led the decline, with SOXX down 22.1%, its worst month since 2002. Unlike previous selloffs driven by a single catalyst, this correction reflects concerns over AI valuations, crowded positioning, and rising Chinese competition. Yet investors continue to buy the theme: Goldman Sachs estimates nearly $13 billion flowed into semiconductor ETFs during the decline. Meanwhile, gains in the equal-weight S&P 500 and software stocks suggest capital is rotating rather than leaving equities. The correction has reduced leverage and valuations, but conviction in the long-term AI story remains intact. Source: Bull Theory
