Edward Conard

Top Ten New York Times Bestselling Author

  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
Upside of Inequality Oxford Unintended Consequences

Robin Brooks Robin Brooks Substack
Date Posted:

Brooks argues rising yields in advanced economies this year are driven by market’s “high alert” regarding debt. The highest cumulative rise in yields this year is in high-debt countries, and yields have risen on days with debt-related bad news.

Markets are on high alert, which they wouldn’t be if they weren’t worried about debt. Markets are aggressively differentiating between high- and low-debt countries as global yields rise. The lowest cumulative rise in yields this year (relative to a global average) is in Switzerland, Norway, Sweden, New Zealand and Australia. High-frequency price action tells us exactly what markets think and they’re clearly agitated about deficits and debt. When Japan’s Takaichi said in January that she was done with “excessive” fiscal austerity, long-term yields spiked sharply. In fact, that spike was so big that it caused global contagion, with the NY Fed doing its infamous “rate check” a few days later to keep the Yen from collapsing. Then there's the US Treasury's surprise buyback announcement on August 19, which tanked the Dollar as precious metals rose.

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  • The Coming Great Repression? — Higher public debt is historically associated with lower, not higher, government bond returns, as financial repression forces banks to hold low-yield bonds and cheap reserves, suppressing borrowing costs. This mechanism reduced British public debt by ~91% of GDP in 1945–55, dwarfing the contributions from inflation or budget surpluses.
  • Rising Bond Yields Are Good, Actually — Higher interest rates remain low relative to nominal income and spending growth of ~7% annually, making current rate levels benign rather than restrictive. Elevated rates help reallocate spending away from consumption and housing toward productive investment, or attract foreign capital to fund that shift.

AI Summary. U.S. Treasury yields have surged to multi-decade highs across maturities, with the 30-year yield reaching levels not seen since 2007 and the 10-year approaching 5%. Rising oil prices are driving inflation expectations, pushing markets to price in near-certain Federal Reserve rate hikes within months.

Elizabeth Stanton Bloomberg
Date Posted:

The 10-year Treasury yield rose 9bp to 4.92%, and the 30-year rose to ~5.35%. The increase in yields stoked demand at today’s 30-year auction, which cleared at 5.308%.

Are higher oil prices forcing the Fed to abandon its rate-cut plans?

Core argument: The 30-year Treasury yield reached its highest level since 2007 and the 10-year hit 4.93%, its highest since November 2023, as an oil-driven inflation surge pushed traders to price a Fed rate hike at 70% odds for next week.

Yields on US government debt rose to fresh multiyear highs — stoking demand for an auction of 30-year bonds. Treasury yields rose by five to 12 basis points across maturities, with the 30-year benchmark reaching levels last seen in 2007. The selloff lured investors to a $22 billion auction of 30-year bonds, which drew historically strong demand. The new securities were awarded at 5.308%, nearly three basis points lower than their yield in pre-auction trading just before the bidding deadline, meaning that bidders at higher yield levels missed out. Investor demand was so strong that a record low 2.2% of the sale went to Wall Street dealers. The auction’s 5.308% result was 2.7 basis points lower than the market level going in, the second-biggest negative gap on record in the past five years.

Takeaways by Macro Roundup® AI

  1. The 30-year Treasury yield reached its highest level since 2007 and the 10-year hit 4.93%, its highest since November 2023, as an oil-driven inflation surge pushed traders to price a Fed rate hike at 70% odds for next week.
  2. The $22 billion 30-year bond reopening carried an indicated yield of ~5.35%, exceeding every 30-year auction result back to 2001 and signaling a structural repricing of long-duration U.S. sovereign risk.
  3. The two-year note yield surpassed 4.5% for the first time since 2024, with markets fully pricing a Fed hike by October rather than December, compressing the expected tightening timeline by two months.

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AI Summary. The U.S. Treasury tripled its debt buyback program to $6bn in longer-dated securities, but markets sold off anyway, pushing 10-year yields to their highest level since 2023.

Greg Ritchie and Alex Harris Bloomberg
Date Posted:

The 10-year Treasury yield rose to ~4.85%, its highest level since 2023, after the Treasury announced a planned buyback of $6B, less than many market participants had expected, despite being 3x the size of the previous operation.

Does buying back more debt actually reduce market anxiety about deficits?

Core argument: The Treasury’s $6 billion buyback of 10–20-year securities — triple the $2 billion initially signaled — failed to suppress borrowing costs, with the 10-year yield rising 5 basis points to 4.83%, its highest level since 2023.

The US Treasury tripled the initial size of its next buyback of longer-dated government debt, in an announcement that was met with initial disappointment by investors. The Treasury Department said it will buy up to $6 billion of outstanding securities set to mature in the 10- to 20-year sector. It’s the first such operation under an expanded buybacks program that showcases Secretary Scott Bessent’s resolve to stem the recent rise in borrowing costs. The new figure is triple the amount initially communicated to investors of $2 billion. Treasuries extended an earlier decline after the release, with the yield on 10-year notes up about 6 basis points to 4.85% as of 11:35 a.m. in New York — their highest level since 2023.

Takeaways by Macro Roundup® AI

  1. The Treasury’s $6 billion buyback of 10–20-year securities — triple the $2 billion initially signaled — failed to suppress borrowing costs, with the 10-year yield rising 5 basis points to 4.83%, its highest level since 2023.
  2. Investor disappointment with Secretary Bessent’s expanded buyback program indicates that fiscal-trajectory concerns are outpacing the Treasury’s ability to manage long-end yields through open-market operations.

Related Articles:

  • Bessent’s Bond Gains Wiped Out as Treasury Yields Jump Again — A Treasury buyback program that briefly suppressed long-term government borrowing costs has been fully reversed by renewed global bond selling, with 30-year yields back at 5.27% and 10-year yields ~10 basis points higher than before the intervention.
  • America’s Risky Debt: What Markets See That Policymakers Don’t — The safety premium that investors historically paid for US government bonds over equivalent alternatives has compressed toward zero and, at longer maturities, reversed — with global investors now pricing foreign government bonds as safer than US Treasurys.
  • Rising Bond Yields Are Good, Actually — Higher interest rates remain low relative to nominal income and spending growth of ~7% annually, making current rate levels benign rather than restrictive. Elevated rates help reallocate spending away from consumption and housing toward productive investment, or attract foreign capital to fund that shift.

AI Summary. Japan's era as a reliable source of cheap borrowing is ending as interest rates rise, unwinding decades of low-rate financial assumptions.

John Authers Bloomberg
Date Posted:

Authers pictures Japan exiting its ultra-low rate regime that helped drive the real effective yen to ~ half its 1990 level. Higher yields should curb yen carry, raise demand for Japanese assets, and force the “world …to do without Japanese funding.”

Is Japan's cheap money era finally coming to an end?

Core argument: Japan’s decades-long role as the world’s low-cost funding source is unwinding as rising interest rates erode the carry-trade economics that made yen borrowing the default strategy across global markets.

For decades, finance has treated Japan as the exception to all rules. While the rest of the world surged and collapsed, Japan trudged on with minimal interest rates and sluggish growth — a safe place to borrow money cheap, through any number of elaborate trades. Last week’s news that Norway’s Norges Fund, one of the biggest sovereign wealth pools, was reallocating its fixed income portfolio in a way that likely shifts from Treasuries to Japanese bonds prompted speculation that more international money would move back to Tokyo and its newly competitive yields. Overnight rates are now forecast to go up by a full percentage point over the next 12 months, to 1.9%, following a shift in perception of the economy.

Takeaways by Macro Roundup® AI

  1. Japan’s decades-long role as the world’s low-cost funding source is unwinding as rising interest rates erode the carry-trade economics that made yen borrowing the default strategy across global markets.
  2. The shift in Japan’s monetary regime forces investors to reprice risk across asset classes that were structured around the assumption of perpetually near-zero Japanese rates.

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AI Summary. Global institutional investors hedge only 41% of their foreign-currency exposure — the lowest rate since at least 2015 — leaving portfolios heavily exposed to dollar depreciation. A sudden shift in sentiment could trigger a self-reinforcing dollar selloff as unhedged holders rush to reduce exposure simultaneously.

Ruth Carson, Masaki Kondo, and Anya Andrianova Bloomberg
Date Posted:
Is Database:
Database

A Bloomberg analysis finds only 41% of global investors’ foreign-currency exposure is hedged in six major markets, the lowest level since 2015. Foreigners now hold almost $40T of American assets.

Are unhedged dollar positions setting up a market crash?

Core argument: Global institutional investors hedged just 41% of their foreign-currency exposure as of June 30—the lowest share since at least 2015—leaving dollar-denominated assets acutely vulnerable to a sentiment-driven selloff.

Sift through the filings of pension funds and insurers around the world and one thing stands out: some of the biggest holders of US assets have little protection against a weaker dollar, leaving the currency at risk of steeper declines if sentiment suddenly turns. Across markets [Canada, Denmark, Australia, Taiwan, Japan and Finland for which data is available] investors hedged just 41% of their foreign-currency exposure as of June 30 — the lowest since at least 2015. While not a complete picture, it offers a glimpse into how the sudden rush last year to hedge against dollar losses triggered by President Donald Trump’s global tariff rollout has faded as the US currency slowly stabilized.

Takeaways by Macro Roundup® AI

  1. Global institutional investors hedged just 41% of their foreign-currency exposure as of June 30—the lowest share since at least 2015—leaving dollar-denominated assets acutely vulnerable to a sentiment-driven selloff.
  2. The retreat from peak hedging activity reflects fading demand for dollar-loss protection after the U.S. currency stabilized following the tariff-driven shock, compressing a key buffer against renewed depreciation.

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AI Summary. The U.S. 10-year term premium has held flat over the past year and remains below those of Japan and Germany, indicating markets are not pricing in deteriorating U.S. fiscal credibility. Higher long-term rates reflect a shift in Federal Reserve rate expectations toward hikes rather than cuts, not fiscal stress.

Torsten Sløk Apollo
Date Posted:

Citing the sideways movement in a FRBNY measure of the US 10-year term premium over the past year, Sløk suggests that the US fiscal situation is generating less investor concern than that of Germany and Japan, and may be focusing more on FFR hikes.

Are rising long-term rates driven by Fed expectations rather than fiscal concerns?

Core argument: The New York Fed’s 10-year term premium has moved sideways over the past 12 months, indicating that rising long rates reflect shifting Fed rate expectations rather than deteriorating market confidence in U.S. fiscal sustainability.

The New York Fed’s measure of the US 10-year term premium has moved sideways over the past 12 months. On this measure, there has been no deterioration over the past year in how the market prices US fiscal sustainability or Fed credibility. The US term premium currently sits below the term premiums of Japan and Germany. This suggests that the market is less worried about the US fiscal situation compared with the fiscal situation in Germany and Japan. Put differently, the Fed went into 2026 expecting several cuts, and now the FOMC is leaning toward hiking. With this backdrop, it is not surprising that long rates are higher.

Takeaways by Macro Roundup® AI

  1. The New York Fed’s 10-year term premium has moved sideways over the past 12 months, indicating that rising long rates reflect shifting Fed rate expectations rather than deteriorating market confidence in U.S. fiscal sustainability.
  2. The U.S. term premium sits below those of both Japan and Germany, meaning markets price U.S. fiscal risk as lower than that of two of its largest developed-economy peers.
  3. The FOMC shifted from expecting several cuts entering 2026 to leaning toward hikes, directly driving the rise in long-term U.S. interest rates.

Related Articles:

  • America’s Risky Debt: What Markets See That Policymakers Don’t — The safety premium that investors historically paid for US government bonds over equivalent alternatives has compressed toward zero and, at longer maturities, reversed — with global investors now pricing foreign government bonds as safer than US Treasurys.
  • Don’t Draw The Wrong Conclusion From Treasury Yields — Rising long-term bond yields reflect higher expected short-term interest rates over the next decade, not concerns about government debt sustainability, as both inflation expectations and the risk premium for holding long-term bonds have remained stable.
  • What Are U.S. Treasury Markets Really Telling Us? Part II — 54 percentage point yield increase since 2022. The shift reflects reduced Federal Reserve absorption of long-duration debt, forcing private investors to demand greater compensation for interest rate risk.

AI Summary. A Treasury buyback program that briefly suppressed long-term government borrowing costs has been fully reversed by renewed global bond selling, with 30-year yields back at 5.27% and 10-year yields ~10 basis points higher than before the intervention.

Greg Ritchie, Cameron Fozi, and Sydney Maki Bloomberg
Date Posted:

The US 10-year yield hit 4.8%, 10bp higher than its level prior to Treasury’s recent buybacks, and the 30-year yield rose to 5.27%, its pre-buyback level.

Does suppressing bond yields through buybacks actually reduce government borrowing costs?

Core argument: The 30-year Treasury yield has returned to 5.27% and the 10-year yield sits ~4.8% — more than 10 bps above pre-intervention levels — fully erasing the gains Bessent’s August 19 buyback expansion briefly secured.

The yields on the longest-dated US government bonds shot back to levels seen just before Scott Bessent shocked markets last month by expanding a buyback program in an effort to halt the rise. The gambit worked briefly, until the selloff that’s been sweeping through global markets pushed the government’s borrowing costs up again. By Tuesday, that drove 30-year Treasury yields to 5.27%, the level seen moments before Bessent announced the move on August 19. The 10-year yield — a crucial benchmark for the cost of all types of loans — is more than 10 basis points higher than it was then, at roughly 4.8%.

Takeaways by Macro Roundup® AI

  1. The 30-year Treasury yield has returned to 5.27% and the 10-year yield sits ~4.8% — more than 10 bps above pre-intervention levels — fully erasing the gains Bessent’s August 19 buyback expansion briefly secured.
  2. The Treasury’s buyback expansion halted the bond selloff only temporarily, demonstrating that demand-side interventions cannot sustainably suppress yields when a broader global fixed-income selloff is driving borrowing costs higher.

Related Articles:

  • Rising Bond Yields Are Good, Actually — Higher interest rates remain low relative to nominal income and spending growth of ~7% annually, making current rate levels benign rather than restrictive. Elevated rates help reallocate spending away from consumption and housing toward productive investment, or attract foreign capital to fund that shift.
  • Bessent Bounce Starts to Emerge in Long Bond Market Metrics — The gap between long-term government bond yields and equivalent swap rates has narrowed to its smallest in months, reflecting increased investor willingness to hold long-dated government debt following expanded buybacks of longer-dated bonds.
  • America’s Risky Debt: What Markets See That Policymakers Don’t — The safety premium that investors historically paid for US government bonds over equivalent alternatives has compressed toward zero and, at longer maturities, reversed — with global investors now pricing foreign government bonds as safer than US Treasurys.

AI Summary. Hyperscaler cloud revenue is growing rapidly (AWS +37%, Azure +43%, Google Cloud +82%), with combined capital spending and R&D rising from $460bn to $870bn over the last 12 months.

Michael Cembalest J.P. Morgan
Date Posted:

Since the start of the data-center buildout, S&P earnings breadth has “eclipsed” that which would be historically implied by the ISM manufacturing survey. Cembalest argues earnings growth “appears highly contingent” on continued hyperscaler spending.

Are hyperscalers investing faster than their revenue growth justifies?

Core argument: Hyperscaler capital spending and R&D nearly doubled from $460B in 2024 to $870B over the trailing twelve months, driving S&P 500 earnings breadth well beyond levels that ISM manufacturing surveys alone would predict—evidence of a powerful AI-led trickle-down across sectors.

The Q2 earnings season was positive for hyperscaler annual revenue growth: AWS 37%, Microsoft Azure 43% and Google Cloud 82%. Rising revenue backlogs reinforce evidence of AI monetization: Google Cloud’s backlog increased $52B to $514B, and the AWS backlog rose to $496B, up 36% q/q. Earnings growth is also more broad-based than it was in 2024-2025 when AI was the primary driver. Earnings growth appears highly contingent on continued hyperscaler capital spending and R&D which rose from $460B in 2024 to $870B over the last 12 months. The share of S&P 500 companies with positive expected earnings growth is normally well-predicted by the ISM manufacturing survey. But since the AI capital spending boom began, earnings breadth has eclipsed the improvement in manufacturing surveys; this suggests a powerful trickle-down effect from hyperscalers to other sectors.

Takeaways by Macro Roundup® AI

  1. Hyperscaler capital spending and R&D nearly doubled from $460B in 2024 to $870B over the trailing twelve months, driving S&P 500 earnings breadth well beyond levels that ISM manufacturing surveys alone would predict—evidence of a powerful AI-led trickle-down across sectors.

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