Treasury Secretary Bessent was the main character in the market's story last week. The Treasury Department increased its bond buyback program, and though the program is a very small drop in a very big ocean, it was the messaging, and Bessent’s wide-ranging, follow-up interview, that was really the focus. It was yet another example of direct market intervention by the Treasury, following the recent yen intervention. It also rekindled concerns about Fed independence and reminded us of Operation Twist, which allowed us to use our latest ridiculous memes.

Long-term yields moved lower initially but quickly erased the move. The S&P 500 fell 1.5% with a monthly options expiration likely impacting the action. AI exposure was under pressure as the sectors with a large concentration in it: Tech, Industrials and Utilities- performed the worst. Oil’s strength contributed to the equity weakness and inability of yields to move lower. Crypto, however, was even stronger. Bitcoin and Ether rose over 20%, with a vicious short squeeze contributing to a lot of the upside.

This week we continued to march towards the end of summer. US equities spent the first half of the week uninspired, quiet and range bound.