Talk about a turn of events. Oil prices are back above $100, PPI inflation is up to +5.4%, and President Trump is…

Talk about a turn of events. Oil prices are back above $100, PPI inflation is up to +5.4%, and President Trump is preparing potential $5,000 "dividends." Now, US long-term borrowing costs are up to their highest since June 2007. What comes next? Let us explain. (a thread)

What we are currently witnessing is unprecedented. The US Treasury is intervening in the bond market in an attempt to drive rates lower. And, not only are investors ignoring it, but they are driving treasury yields HIGHER. That's right. Markets are *ignoring* the US Treasury.

To better understand what is happening, we must look at the broader picture. At the start of 2026, the Fed was expected to CUT rates at least 3 times, for a total of 75 bps. Now, markets see 2 rate HIKES, for a total of 50 bps. That's a +125 bps swing in expectations.

This shift in expectations really began to gain momentum on February 28th, when the Iran War began. Today marks day 194 of the Iran War and oil prices are still rising. US oil prices are up +50% since July 2nd and back above $100/barrel. Inflation expectations are soaring.

This has driven diesel prices in the US to their highest level on record, up +75% this year. This is especially problematic as we just entered PEAK diesel demand period in the US. Shipping costs are soaring, pushing inflation expectations sharply higher. Inflation is back.

The reality is that inflation never left. CPI inflation in the US has been above the Fed's 2% target for 60 consecutive months. Even as President Trump appointed Fed Chair Warsh expecting rate cuts, it appears his first policy move will be a HIKE. The bond market knows this.

This has driven US borrowing costs to a fresh 30Y high. As a result, the US Treasury announced that they are tripling long-term buybacks to $6 billion. That means the US Treasury went from doubling, to "at least doubling," to tripling buybacks. Yet, yields are still rising.

What you must realize is that we are facing structural failure. Inflation won't come down, deficit spending is running at $2T+ per year, and there is no end in sight. The long-term ONLY solution to this crisis is a fundamental restructuring. Again, the market knows this.

Despite this, President Trump is preparing for more economic stimulus. Trump said he will issue a $5,000 "dividend" to every adult citizen in the US if Republicans win the midterms. This would cost ~$1.2 trillion, the biggest economic stimulus payment since the pandemic.

Sum it all up, and it's clear what's next. Treasury intervention is here, inflation is rising, and we are in the biggest technological revolution in history. The asset owner economy will grow. As we have warned for 2+ years, those who do not own assets are being left behind.

We are already seeing it. It is no coincidence that Bitcoin, Gold, and stocks all rallied when the US Treasury announced intervention on August 19. The reality is that the denominator of all assets, the USD, is losing value, and AI is exploding. Asset owners are protected.

The combination of innovation and inflation have led to historic swings in the market. Our research aims to anticipate these swings in advance. Want to access our premium research? Subscribe at the link below to access our latest analysis and alerts: thekobeissiletter.com/subscribe

Ultimately, the market's biggest fear is a repeat of the 1970s, with a 2nd wave of inflation. The reality is that in these conditions, all we can do is position accordingly. Keep watching the bond market. Follow us @KobeissiLetter for real time analysis as this develops.