Why Bessent Blinked | Luke Gromen on Doubling of Treasury Buyback Plan to Tame Long-End Yields – Monetary Matters with Jack Farley

Why Bessent Blinked | Luke Gromen on Doubling of Treasury Buyback Plan to Tame Long-End Yields – Monetary Matters with Jack Farley — Transcript

Market views

Bullish

GLD— Gold is the preferred duration asset as the US must maintain significantly negative real rates to avoid debt death spiral. Treasury buybacks and yield curve control are bullish for gold as they represent money printing and inflation. Gold has become a larger share of FX reserves than treasuries and central banks are accumulating.
SPY— US equities should be long in dollar terms as the government cannot allow nominal default and will inject liquidity to prevent treasury market death spiral. Negative real rates and yield curve control are bullish for nominal stock prices.
COPPER— Industrial metals like copper are needed for grid buildout and infrastructure renaissance. Copper is quietly near $7 with little attention, positioned to benefit from US industrial policy shift.
INFRA— US industrial and infrastructure buildout is necessary for self-sufficiency and will drive massive nominal growth. Private manufacturing construction is down 18% YoY despite AI boom, suggesting upside when real industrial renaissance begins.

Bearish

TLT— Long-duration treasuries will continue losing value in real terms as government must maintain negative real rates. Treasury has 90-95% more to fall against gold. Entitlements and interest now exceed receipts, making fiscal situation unsustainable.
NVDA— AI boom is largest CapEx cycle in US history but will end in bust like all previous tech bubbles (canals, railroads, telecom). Will undermine tax base through white-collar job losses before productivity gains materialize. Take profits after 2-3 years into bubble.
PRIVATECREDIT— Private credit market shows illiquidity as insurance companies couldn't sell to buy 4.7-5% treasuries. Middle East liquidity crisis tied to private credit exposure. Represents duration mismatch and hidden leverage in system.

Not investment advice.