Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…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
  • “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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “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
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…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
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, September 11, 2026

AI Summary. Data from AI router firms, which forward client queries to the lowest-cost model capable of an adequate response, show a declining share of queries that require closed-weight frontier models. This suggests open models are capturing usage from the largest AI providers.

Toby Nangle Financial Times
Date Posted:

Data on OpenRouter, an AI query triage service, show that at the start of the year, the share of queries routed to a closed-weight proprietary model was 60%. That share has declined to 24% as open-weight performance has improved relative to frontier models.

Are open models taking query share from the largest AI providers?

Core argument: AI routers such as OpenRouter take model-indifferent client queries and direct them to the lowest-cost model that produces a good-enough response, reserving frontier models for the hardest questions.

One way to see which way the wind is blowing on open-model versus closed-model usage is by looking at data from router firms like OpenRouter, the New York start-up that Stripe agreed to buy last month. AI routers work a bit like an AI query triage service with a toll booth strapped on. Clients rock up, basically model-indifferent, and rather than tie themselves to any given model, they just send their queries to the router, which then flips them on to the lowest-cost model that will produce a good enough response for whatever the task at hand. Asking really tough closed-end frontier-model-worthy questions? To a frontier model they go. Increasingly, the share of queries that are truly closed-weight frontier-model-worthy is declining.

Takeaways by Macro Roundup® AI

  1. AI routers such as OpenRouter take model-indifferent client queries and direct them to the lowest-cost model that produces a good-enough response, reserving frontier models for the hardest questions.
  2. The share of queries that are truly closed-weight frontier-model-worthy is declining, according to router firm data.
  3. Stripe agreed to buy OpenRouter, a New York start-up whose routing data offers a view of open-model versus closed-model usage.

Related Articles:

  • The AI Price Wars and Their Consequences — Artificial intelligence models are converging in capability and price, making switching easier and margins harder to defend, with US labs cutting prices on lower- and mid-tier offerings while keeping frontier models expensive. An 80% annual price decline requires 400% unit growth just to hold revenue flat, straining firms financing enormous capital spending.
  • OpenAI and Anthropic In Price War as Chinese AI Rivals Gain Ground — OpenAI cut its GPT-5.6 Luna prices by 80% and Anthropic launched Opus 5 at half the price of its Fable 5 model while cancelling a planned Sonnet 5 price increase. Headline token prices are not directly comparable, since more capable models can finish tasks using fewer tokens or attempts.
  • The AI Trade Is Losing One of Its Key Signals — An index blending artificial intelligence token prices and usage is ambiguous when it softens, since token prices have fallen more than 90% since 2023 while total spending has roughly doubled over the past year. Allianz Research measures a nearly 46% growth gap between artificial intelligence investment and sales, wider than the 32% divergence during the 2001 telecom bust.

AI Summary. The ARC-AGI exam was designed to test fluid intelligence—acquiring skills and solving unfamiliar problems from first principles—rather than recall of training data, and early models scored near zero while humans score 60%-70%. On the latest interactive version, GPT-6 Astra scored 62% with a standard harness and 99% with a reasoning-preserving harness.

Michael Cembalest J.P. Morgan
Date Posted:

Newly released Chat GPT-6 scored 62% on Francoise Chollet’s fluid human intelligence test when undirected by humans and 99% when directed.

Have AI models reached human-level performance on fluid intelligence tests?

Core argument: GPT-6 Astra scored 62% on ARC-AGI-3 with a standard harness and 99% with a Provider Adapter harness that uses OpenAI's context management features to preserve and reuse the model's reasoning between interactions.

In 2019, Francois Chollet created the ARC-AGI, an exam designed to show the gulf between AI model memorized answers and the fluid intelligence that people have. The exam assesses the ability to quickly acquire skills and solve unfamiliar problems from first principles, rather than just memorizing enormous amounts of training data and regurgitating information. GPT3 scored a zero on ARC-AGI-1 (humans score 60%-70%), and OpenAI o1 scored just 3% on ARC-AGI-2. In March 2026, Chollet and the ARC Prize Foundation released ARC-AGI-3, a harder set of problems that shifted from static to dynamic interactive video challenges. GPT-6 Astra scored 62% with a standard harness and 99% with a Provider Adapter harness (which uses OpenAI’s context management features to preserve and reuse the model’s reasoning between interactions).

Takeaways by Macro Roundup® AI

  1. GPT-6 Astra scored 62% on ARC-AGI-3 with a standard harness and 99% with a Provider Adapter harness that uses OpenAI's context management features to preserve and reuse the model's reasoning between interactions.
  2. Francois Chollet created ARC-AGI in 2019 to measure the ability to acquire skills quickly and solve unfamiliar problems from first principles rather than regurgitate memorized training data, with humans scoring 60%–70% on ARC-AGI-1.
  3. GPT-3 scored zero on ARC-AGI-1 and OpenAI o1 scored 3% on ARC-AGI-2, before Chollet and the ARC Prize Foundation released ARC-AGI-3 in March 2026, shifting from static problems to dynamic interactive video challenges.

Related Articles:

  • The AI Re-Acceleration That Wasn’t — An analysis of Epoch's Capabilities Index data, controlling for developer and model family, finds no statistically significant breakpoint in AI progress; a segmented model fits no better than a straight-line trend (p = 0.615), with the estimated slope change ranging from -8.4 to +23.4 points per year.
  • Why .400 Hitters Disappeared — and What It Means for AI — Artificial intelligence models' capability gains are shrinking in percentage terms, falling from about 15% relative to the baseline early on to roughly 10% for the same absolute increment, narrowing the gap between frontier and good-enough models. The author argues this points to a commoditizing market where price, not minor model differences, becomes the main differentiator, pressuring frontier firms' margins.
  • Chart of the Day: Small Models are Closing the Gap to Frontier AI — Achieving 60% on MMLU, a test of academic reasoning, once required a 540bn-parameter model but was reached by a 3.8bn-parameter model two years later, a 142x reduction in parameters. Models small enough to run on phones or sensors shift inference from data centers to devices, weakening the case for paying cloud providers per token.

AI Summary. US diesel pump prices reached a record $6.06 a gallon, above the prior high of $5.82, according to motorist group AAA. Diesel's role in the transport supply chain is feeding into rising producer prices, and grain farmers report that higher fuel and fertiliser costs are eating into profits.

Stephanie Findlay and Jamie Smyth Financial Times
Date Posted:

US retail diesel prices have climbed to an all-time nominal high of $6.06 per gallon. The previous nominal high in January 2022 would be $6.54 in current dollars.

Are record diesel prices raising producer costs and squeezing farmers?

Core argument: US diesel pump prices rose to a record $6.06 a gallon on Friday, according to AAA, exceeding the prior high of $5.82 set in 2022 after Russia's full-scale invasion of Ukraine.

The diesel pump price has surged this year and rose to $6.06 on Friday, motorist group AAA said, above the previous record high of $5.82 in 2022 following Russia’s full-scale invasion of Ukraine. Diesel’s critical role in the transport supply chain is also feeding into surging producer prices, which can stoke inflationary pressures at a time when Americans increasingly feel squeezed by affordability. The jump in diesel comes ahead of the autumn high season, where the fuel is used to power agricultural equipment to harvest and transport crops. Grain farmers in America’s Corn Belt have said they are facing a crisis with rising fuel and fertiliser prices eating into profits.

Takeaways by Macro Roundup® AI

  1. US diesel pump prices rose to a record $6.06 a gallon on Friday, according to AAA, exceeding the prior high of $5.82 set in 2022 after Russia's full-scale invasion of Ukraine.
  2. Diesel's role in the transport supply chain is feeding into surging producer prices, which can stoke inflationary pressures as Americans increasingly feel squeezed by affordability.
  3. The diesel price jump precedes the autumn high season, when the fuel powers agricultural equipment to harvest and transport crops, and Corn Belt grain farmers say rising fuel and fertiliser prices are eating into profits.

Related Articles:

  • US Diesel Prices Soar To Record High — US diesel pump prices reached a record average of $5.85 a gallon, according to the American Automobile Association, surpassing the previous high. Harvest season demand, early winter heating needs, and planned US refinery maintenance are likely to squeeze diesel supplies further.
  • U.S. Economy Less Vulnerable To Geopolitical Oil Price Shocks Than In The Past — The United States became a net oil exporter in late 2019, and oil and oil product spending fell from near 8% of GDP in 1980 to 3% in 2024. The authors estimate a 15% global oil supply disruption would now cut annualized U.S. real GDP growth by 0.3pp, versus 1.7pp in the rest of the world.
  • Fighting Words: The Energy Transition in 2026 — Estimates based on primary energy overstate how much electricity is needed to replace oil in passenger cars, since electric motors convert 80%-90% of electricity into motion versus about 18% for gasoline cars. Measuring useful final energy net of waste heat avoids this "primary energy fallacy": the US consumed 45 exajoules of useful final energy versus 95 exajoules of primary energy.

AI Summary. A firm inflation reading raised the odds implied by interest-rate futures of a quarter-point Federal Reserve rate increase to about 85% from roughly 70%. The central bank has been divided, with three officials dissenting in favor of raising rates and oil prices climbing above $99 a barrel from $85.76.

Justin Lahart and Matt Grossman Wall Street Journal
Date Posted:

The implied likelihood of a September rate hike increased from 70% to 85% because the rate of inflation didn’t decline in August, headline and core CPI are 3.4% and 2.4% y/y, respectively.

Does a firm inflation reading raise the odds of a rate increase?

Core argument: Interest-rate futures imply about an 85% chance the Federal Reserve raises its target range for overnight rates by a quarter point, up from roughly 70% before the August inflation report.

The August inflation reading has big implications for a Fed that has been sharply divided over whether it should raise rates at its policy-setting meeting next week. At the Fed’s last meeting, in July, three officials dissented in favor of raising rates, and others have since said they could join them if inflation doesn’t improve. Interest-rate futures imply there is now about a 85% chance that the central bank will increase its target range on overnight rates by a quarter point. Prior to the report, the chances were about 70%. Further complicating the Fed decision, oil prices have surged this month, with crude lately fetching over $99 a barrel in Friday New York trading, versus $85.76 at the end of August.

Takeaways by Macro Roundup® AI

  1. Interest-rate futures imply about an 85% chance the Federal Reserve raises its target range for overnight rates by a quarter point, up from roughly 70% before the August inflation report.
  2. Three Federal Reserve officials dissented in favor of raising rates at the July meeting, and others have since said they could join them if inflation does not improve.
  3. Crude oil fetched over $99 a barrel in Friday New York trading, versus $85.76 at the end of August, further complicating the Federal Reserve's rate decision.

Related Articles:

  • Global Views: They’re Not Hiking — Estimated underlying trend job growth slowed to about 5k, below the estimated 50k breakeven pace, so similar readings would likely reverse part of the unemployment rate's decline from 4.5% to 4.1%. The authors argue that decline reflects lower labor force participation rather than higher employment, with wage growth still weak.
  • Home Alone: Inflation And The New Fed Chair — Current readings on labor market tightness, manufacturing price pressures, supply chain tightness and the output gap resemble conditions that have historically preceded Federal Reserve rate increases rather than cuts, and futures markets are pricing in hikes. Averaging several monetary policy rules implies a policy rate of 4.00%–4.85% versus the current 3.50%–3.75%.
  • Do Voters Punish Inflation or Pay Cuts? Inflation and Real Wages in U.S. Elections — An analysis of U.S. counties estimates that where wages grew faster than prices, voters supported the incumbent party more, while counties with larger real wage losses than average shifted more toward the opposition. A one-standard-deviation larger real wage loss is associated with shifts of roughly 0.10 and 0.19 percentage points in vote share and margin.

AI Summary. Global bond yields are rising and markets are differentiating between high- and low-debt countries, with the smallest cumulative yield increases relative to the global average in Switzerland, Norway, Sweden, New Zealand and Australia. The author argues this price action shows investors are agitated about deficits and debt.

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.

Are rising bond yields showing investor concern about government debt?

Core argument: Global bond markets are differentiating between high- and low-debt countries as yields rise, with Switzerland, Norway, Sweden, New Zealand and Australia showing the lowest cumulative yield increases this year relative to a global average.

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.

Takeaways by Macro Roundup® AI

  1. Global bond markets are differentiating between high- and low-debt countries as yields rise, with Switzerland, Norway, Sweden, New Zealand and Australia showing the lowest cumulative yield increases this year relative to a global average.
  2. Japanese long-term yields spiked sharply after Takaichi said in January she was done with "excessive" fiscal austerity, a move large enough to cause global contagion and prompt the New York Fed's "rate check" days later to keep the Yen from collapsing.
  3. The US Treasury's surprise buyback announcement on August 19 tanked the Dollar while precious metals rose.

Related Articles:

  • Global Debt Report 2026 — Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.
  • The Coming Great Repression? — Across countries and over time, higher public debt burdens are associated with lower relative returns on government bonds, the opposite of standard risk-premium predictions. The authors estimate financial repression—making banks captive bond buyers and loading them with low-return reserves—contributed 90.7 percentage points of GDP to Britain's postwar debt reduction, versus 20.3 from surprise inflation.
  • Rising Bond Yields Are Good, Actually — Interest rates remain low relative to reasonable expectations of inflation and growth, with incomes and spending rising about 7% a year in dollar terms. Absent idle workers, machines, and materials, higher rates can help shift resources toward business equipment and nonresidential construction by discouraging consumer spending and housing or attracting foreign goods and services today.

AI Summary. Varsity sports participation varies with academic achievement: after adjusting for school size, 35% of students in the top quintile of eighth-grade math scores played varsity sports versus 12% in the bottom quintile. Students at the smallest schools were 2.8x as likely to participate as those at the largest.

Nat Malkus and Sam Hollon American Enterprise Institute
Date Posted:

A large sample of Indiana high school students shows a near-linear relationship between 8th grade math test scores and participation in varsity athletics. Academic success and participation in extracurriculars appear to be complementary.

How do academic achievement and school size shape varsity sports participation?

Core argument: After adjusting for school size, 35% of students in the top eighth-grade math achievement quintile played varsity sports in 2025, compared with 12% in the bottom quintile, with a largely linear relationship across quintiles.

We find large gaps in varsity sports participation by academic achievement, which we measure using students’ eighth-grade math test scores. Students who attended the smallest schools (first quintile) were 2.8 times as likely to participate in varsity sports as those who attended the largest schools (fifth quintile). We find that after adjusting for school size 35% of students in the top achievement quintile played varsity sports in 2025, compared with just 12% of students in the bottom quintile. In general, the relationship between achievement quintiles and varsity sports participation was remarkably linear. [The exception was football], the largest sport by participation [17% of all varsity athletes and overwhelmingly male]. Here the top quintile [in 8th grade math] had 20% lower odds of playing than students in the middle achievement quintile.

Takeaways by Macro Roundup® AI

  1. After adjusting for school size, 35% of students in the top eighth-grade math achievement quintile played varsity sports in 2025, compared with 12% in the bottom quintile, with a largely linear relationship across quintiles.
  2. Students at the smallest schools (first quintile by size) were 2.8 times as likely to participate in varsity sports as students at the largest schools (fifth quintile).
  3. Football, the largest sport at 17% of all varsity athletes and overwhelmingly male, is the exception: students in the top eighth-grade math quintile had 20% lower odds of playing than those in the middle quintile.

Related Articles:

  • An Extra Point for Attendance: The Impact of High School Varsity Athletics on Absenteeism — High school varsity athletes are absent about 1.37 percentage points less often than non-athletes over the school year, nearly 20% lower, after controlling for factors linked to both sports participation and attendance. Athletes' absence rates fall further while their sport is in season, which the authors argue suggests participation itself improves attendance.
  • The Benefits of Scholastic Athletics — Using longitudinal data with extensive controls for family background, ability, and personality, the authors estimate that college varsity athletes from disadvantaged backgrounds—including women and men from low-income families and Black men—earn more after graduation than comparable non-athletes. The authors conclude that participation in college sports promotes social mobility, with no evidence of adverse outcomes.
  • No Revenge for Nerds? Evaluating the Careers of Ivy League Athletes — Ivy League athletes are far more likely than non-athlete classmates to enter business and finance jobs, and the authors estimate they attain higher terminal wages, greater cumulative career earnings, and more senior positions, controlling for school, graduation year, major, and first job. The authors argue this suggests non-academic human capital developed through athletics is valued in the labor market.

Monday, September 14, 2026

AI Summary. The 10-year US Treasury yield reached 5% for the first time since 2023, as rising oil prices weighed on government bonds globally. The yield serves as a benchmark for trillions of dollars in assets worldwide, and aside from a brief move to 5% in 2023, it last held above that level before the 2008 financial crisis.

Emily Herbert, Ian Smith and Kate Duguid Financial Times
Date Posted:

The US 10-year Treasury yield broke 5% for the first time since 2023 rising to 5.01% before falling back to ~4.95%.

Are rising oil prices pushing government bond yields higher worldwide?

Core argument: The 10-year US Treasury yield reached 5% for the first time since 2023, rising 0.04 percentage points to 5.01% in morning Wall Street trading before easing to about 4.95%.

The 10-year US Treasury yield hit 5% on Monday for the first time since 2023, as surging oil prices battered government bonds across the world and pushed the world’s most important financial gauge into dangerous territory. The yield was up 0.04 percentage points at 5.01% in morning trading on Wall Street [before falling to ~4.95%] America’s 10-year yield acts as a benchmark for trillions of dollars in assets worldwide and its jump to 5% is widely viewed as a worrisome threshold. Besides a brief rise to 5% in 2023, the last time 10-year borrowing costs hovered above that level was in the lead-up to the 2008 financial crisis.

Takeaways by Macro Roundup® AI

  1. The 10-year US Treasury yield reached 5% for the first time since 2023, rising 0.04 percentage points to 5.01% in morning Wall Street trading before easing to about 4.95%.
  2. Surging oil prices battered government bonds worldwide, pushing the US 10-year yield — a benchmark for trillions of dollars in assets globally — to a level widely viewed as a worrisome threshold.
  3. Apart from a brief rise to 5% in 2023, US 10-year borrowing costs last hovered above that level in the lead-up to the 2008 financial crisis.

Related Articles:

  • Don’t Draw The Wrong Conclusion From Treasury Yields — Ten-year real yields equal the average expected overnight rate over the next decade plus a term premium, and fiscal credibility or debt sustainability concerns would show up as a higher term premium. With the term premium and inflation expectations contained, the increase in bond yields reflects higher expected long-term overnight rates.
  • US Yields at Multiyear Highs Attract Buyers to 30-Year Auction — Yields on US government debt rose 5 to 12 basis points across maturities, with the 30-year benchmark reaching levels last seen in 2007. The higher yields drew strong demand at a $22bn auction of 30-year bonds, awarded at 5.308% — 2.7 basis points below pre-auction market levels — with a record-low 2.2% going to Wall Street dealers.
  • How Might Fiscal Policy Respond to the Rise of Artificial Intelligence? — The Congressional Budget Office estimates that a permanent 0.5 percentage point increase in annual productivity growth would lower publicly held federal debt after 30 years by 39% of GDP, offsetting roughly half the projected rise from 101% of GDP to 175%. Higher revenue and slower spending growth outweigh higher interest costs.

AI Summary. The authors estimate the natural inflation-adjusted rate on 10-year US Treasuries fell from about 5% in the early 1980s to roughly 1.6% in 2010-2015 and is now rising, reaching almost 2.6%. That implies a 10-year Treasury yield consistent with stable inflation of about 4.7%.

Jamie Rush, Martin Ademmer, and Tom Orlik Bloomberg
Date Posted:

Bloomberg estimates that the real natural rate on 10-year Treasuries rose to ~2.6% in Q2 2026, ~100bp above its 2010–15 trough. That implies a “10-year Treasury yield consistent with stable inflation of around 4.7%,” close to the current market yield of ~5%.

Is the natural rate on long-term Treasuries rising again?

Core argument: The authors estimate the real natural rate on 10-year Treasuries at almost 2.6% in the second quarter of 2026, up from a trough of about 1.6% between 2010 and 2015.

For more than three decades, from the early 1980s to the mid-2010s, the natural rate on 10-year Treasuries was falling. Our estimates show it dropped from an inflation-adjusted peak of around 5% in the early 1980s to a trough of about 1.6% between 2010 and 2015. Now it is rising. Our latest calculations, inspired by a framework developed by economists at the Federal Reserve Bank of New York, put the real natural rate at almost 2.6% in the second quarter of 2026. In nominal terms, that translates to a 10-year Treasury yield consistent with stable inflation of around 4.7%.

Takeaways by Macro Roundup® AI

  1. The authors estimate the real natural rate on 10-year Treasuries at almost 2.6% in the second quarter of 2026, up from a trough of about 1.6% between 2010 and 2015.
  2. The authors’ estimates show the inflation-adjusted natural rate on 10-year Treasuries fell from a peak near 5% in the early 1980s to its mid-2010s trough, a decline of more than three decades that has now reversed.
  3. A real natural rate of about 2.6% translates into a nominal 10-year Treasury yield consistent with stable inflation of around 4.7%, according to the authors’ calculations, which draw on a framework developed by Federal Reserve Bank of New York economists.

Related Articles:

  • America’s Risky Debt: What Markets See That Policymakers Don’t — Two market-based measures suggest the safety premium investors pay to hold US Treasuries has compressed toward zero and at times reversed: the spread between top-rated corporate bonds and Treasuries after stripping out default risk, and the gap between currency-hedged foreign G10 government yields and Treasury yields at the same maturity, where longer-maturity comparisons now favor foreign bonds.
  • How Might Fiscal Policy Respond to the Rise of Artificial Intelligence? — The Congressional Budget Office estimates that a permanent 0.5 percentage point increase in annual productivity growth would lower publicly held federal debt after 30 years by 39% of GDP, offsetting roughly half the projected rise from 101% of GDP to 175%. Higher revenue and slower spending growth outweigh higher interest costs.
  • The Coming Great Repression? — Across countries and over time, higher public debt burdens are associated with lower relative returns on government bonds, the opposite of standard risk-premium predictions. The authors estimate financial repression—making banks captive bond buyers and loading them with low-return reserves—contributed 90.7 percentage points of GDP to Britain's postwar debt reduction, versus 20.3 from surprise inflation.

AI Summary. An estimate of the intrinsic 10-year US Treasury rate, built from actual inflation and real economic growth, far exceeded the actual 10-year Treasury rate after inflation surged, and that gap has since narrowed to roughly 4.75% actual versus 5.41% intrinsic.

Aswath Damodaran Musing on Markets
Date Posted:
Is Database:
Database

Damodaran’s “intrinsic” 10-year Treasury rate—calculated as US real GDP growth plus inflation—has broadly tracked the nominal 10-year Treasury yield since 1962. As of early September 2026, the 10-year yield of ~5% was 41bp below his 5.41% intrinsic-rate estimate.

Do long-term Treasury rates line up with inflation and growth fundamentals?

Core argument: As of September 2026, the US 10-year Treasury rate stood at 4.75% while the intrinsic 10-year rate was 5.41%, a gap of 66 basis points.

[The graph shows] the actual inflation rates and real GDP growth rates for the US, going back to 1962, and [the implied] intrinsic 10-year treasury rate (the cumulative column) and actual 10-year treasury rate each year. When inflation surged in 2022, interest rates went up, but since the rates that I am tracking are long term rates, the intrinsic risk free rate vastly exceeded the actual rate that year, but the difference has narrowed over time, and almost dissipated by September 2026 (when the US 10-year treasury bond rate was [5%] and and the intrinsic ten-year rates yielded 5.41%).

Takeaways by Macro Roundup® AI

  1. As of September 2026, the US 10-year Treasury rate stood at 4.75% while the intrinsic 10-year rate was 5.41%, a gap of 66 basis points.
  2. When inflation surged in 2022, the intrinsic risk-free rate vastly exceeded the actual 10-year Treasury rate, and that difference has narrowed since.
  3. The intrinsic 10-year Treasury rate is built from actual US inflation and real GDP growth rates going back to 1962 and compared against the actual 10-year Treasury rate each year.

Related Articles:

  • The Budget and Economic Outlook: 2026 to 2036 — The Congressional Budget Office projects the federal deficit will grow from $1.9tn (5.8% of GDP) to $3.1tn (6.7%) over a decade, above the 3.8% averaged over the past 50 years, with rising net interest costs driving much of the increase. Federal debt held by the public is projected to rise from 101% to 120% of GDP.
  • US 30-Year Bonds Erase Gains From Treasury’s Buyback Surprise — US Treasuries erased nearly all gains that followed the Treasury Department's surprise decision to increase buybacks of longer-dated bonds, with the 30-year yield rising above 5.27% and the 10-year touching 4.71%. The reversal signals the move has done little to ease concern about surging government debt.
  • Annual Economic Report — Public debt in advanced economies has risen steadily, limiting governments' ability to cushion higher energy prices. Cyclically adjusted primary deficits averaged 1.9% of GDP in advanced economies since 2022 versus 1.1% over the two preceding decades, and 1.8% in emerging markets versus 0.1% from 2000–2019.

AI Summary. The 10-year US Treasury yield has reached a three-year high, and the global rise in yields poses the greatest risk in countries where investors doubt debt sustainability, most notably France. The gap between French and German 10-year government bond yields is near 1%, and French debt financing costs are their highest since 2008 amid a divided legislature.

John Authers Bloomberg
Date Posted:

Authers warns that “if Bessent doesn’t tame the Treasury market, the worst effects may well be felt in France.” The spread between French 10-year OATs and equivalent German Bunds is close to 1pp—higher than during other episodes of French political upheaval over the past decade.

Where do rising global bond yields pose the greatest risk?

Core argument: The 10-year yield ended last week at a three-year high, close to returning to levels last seen in 2007, a threshold whose breach could prove crucial.

The global shift in yields could have its greatest impact in other jurisdictions where investors worry that government debt is out of control. The most worrying example is France. French politics has been logjammed for two years, since snap elections left the legislature roughly equally divided between three political blocs. That gridlock won’t end before next spring’s presidential election, which might well at last give Marine Le Pen’s Rassemblement National a turn in power. The issue is whether the fiscal concerns boil over into a market crisis before or after the election. The spread of French 10-year OATS over equivalent German bunds is close to 1%, higher than during other political upheavals of the last 10 years. In absolute terms, the cost of financing French government debt is its highest since the crisis of 2008.

Takeaways by Macro Roundup® AI

  1. The 10-year yield ended last week at a three-year high, close to returning to levels last seen in 2007, a threshold whose breach could prove crucial.
  2. The spread of French 10-year OATs over equivalent German bunds stands close to 1%, higher than during other political upheavals of the last 10 years, while the absolute cost of financing French government debt is its highest since the 2008 crisis.
  3. French politics has been logjammed for two years since snap elections split the legislature roughly evenly among three blocs, gridlock unlikely to end before next spring’s presidential election, which might give Marine Le Pen’s Rassemblement National a turn in power.

Related Articles:

  • Global Debt Report 2026 — Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.
  • The Global Debt Shock — Global bond yields are rising and markets are differentiating between high- and low-debt countries, with the smallest cumulative yield increases relative to the global average in Switzerland, Norway, Sweden, New Zealand and Australia. The author argues this price action shows investors are agitated about deficits and debt.
  • Annual Economic Report — Public debt in advanced economies has risen steadily, limiting governments' ability to cushion higher energy prices. Cyclically adjusted primary deficits averaged 1.9% of GDP in advanced economies since 2022 versus 1.1% over the two preceding decades, and 1.8% in emerging markets versus 0.1% from 2000–2019.

AI Summary. The refining margin for diesel averaged about $10.50 from 1985 to 2021 and never exceeded $30 even during the 2004–2008 refining boom. Because the diesel market is roughly 29.5m barrels a day versus under 8m for jet fuel, far larger shifts in refinery output are needed to move diesel supply or prices.

Javier Blas Bloomberg
Date Posted:

Given the reduction in Chinese oil imports and the ongoing wars, increasing diesel supply will be difficult. Blas argues that higher diesel prices will kill some demand and rebalance the market.

Why is diesel supply harder to rebalance than jet fuel?

Core argument: The crack spread averaged about $10.50 from 1985 to 2021 and never exceeded $30 even during the 2004–2008 refining boom driven by surging Chinese oil demand.

From 1985 to 2021, the crack spread averaged about $10.50. Even between 2004 and 2008 — the so-called golden age of refining, when Chinese oil demand exploded — it never surpassed $30. As refining has become ever more lucrative in recent months, every plant outside Russia, the Middle East and China is running as fast as it can. Unfortunately, the large size of the diesel market, at about 29.5 million barrels a day, means significant shifts in refinery output would be needed to move the dial on either supply or prices. To put this into perspective, jet fuel has a daily volume of less than 8 million barrels, so relatively small changes in refining output and airline consumption were able shift the supply and demand balance more easily. Ultimately, higher diesel prices should push demand lower, rebalancing the market — but that carries an economic cost, particularly for those countries that are more reliant on the fuel.

Takeaways by Macro Roundup® AI

  1. The crack spread averaged about $10.50 from 1985 to 2021 and never exceeded $30 even during the 2004–2008 refining boom driven by surging Chinese oil demand.
  2. The diesel market’s size of about 29.5 million barrels a day means significant shifts in refinery output would be needed to move either supply or prices, while every plant outside Russia, the Middle East and China runs as fast as it can.
  3. Jet fuel’s daily volume of less than 8 million barrels allowed relatively small changes in refining output and airline consumption to shift the supply and demand balance more easily than in diesel.

Related Articles:

  • US Diesel Hits Record $6 A Gallon On Iran Supply Shock — US diesel pump prices reached a record $6.06 a gallon, above the prior high of $5.82, according to motorist group AAA. Diesel's role in the transport supply chain is feeding into rising producer prices, and grain farmers report that higher fuel and fertiliser costs are eating into profits.
  • U.S. Economy Less Vulnerable To Geopolitical Oil Price Shocks Than In The Past — The United States became a net oil exporter in late 2019, and oil and oil product spending fell from near 8% of GDP in 1980 to 3% in 2024. The authors estimate a 15% global oil supply disruption would now cut annualized U.S. real GDP growth by 0.3pp, versus 1.7pp in the rest of the world.
  • Fighting Words: The Energy Transition in 2026 — Estimates based on primary energy overstate how much electricity is needed to replace oil in passenger cars, since electric motors convert 80%-90% of electricity into motion versus about 18% for gasoline cars. Measuring useful final energy net of waste heat avoids this "primary energy fallacy": the US consumed 45 exajoules of useful final energy versus 95 exajoules of primary energy.

AI Summary. The European earth observation service reported an August global average surface air temperature of just under 62.6°F, 2.97°F above the pre-industrial baseline and on a par with the prior record, with global sea temperature at 69.93°F. Provisional US data recorded 100 consecutive days of record ocean warming.

Attracta Mooney and Aditi Bhandari Financial Times
Date Posted:

Global mean sea-surface temperature reached 69.9°F in August, amid 100 consecutive days of record ocean warming since early June, according to provisional NOAA data. The increase in temperature has been amplified by the El Niño cycle.

Are global air and ocean temperatures setting new records?

Core argument: The European earth observation service put August’s global average surface air temperature at 2.97°F above the pre-industrial baseline, just under 62.6°F, on a par with the previous record set in July 2023.

The European earth observation service said the global average surface air temperature in August was 2.97°F higher than the pre-industrial baseline, reaching just under 62.6°F. This put it on a par with the previous record set in July 2023. The global sea temperature in August was put at 69.93°F. This week marked 100 consecutive days of record warming since early June, according to provisional data from the US National Oceanic and Atmospheric Administration. This stretch was exceeded during the previous El Niño cycle. It is estimated that El Niño typically affects the global mean temperature by about 0.36°F, although the magnitude was likely to be larger this year because of the extent of the naturally occurring event.

Takeaways by Macro Roundup® AI

  1. The European earth observation service put August’s global average surface air temperature at 2.97°F above the pre-industrial baseline, just under 62.6°F, on a par with the previous record set in July 2023.
  2. Global sea temperature in August was put at 69.93°F, and provisional NOAA data show 100 consecutive days of record warming since early June, a stretch exceeded during the previous El Niño cycle.
  3. El Niño is estimated to affect the global mean temperature by about 0.36°F, though the magnitude was likely to be larger this year given the extent of the naturally occurring event.

Related Articles:

  • Warming Seas Are Brewing Extreme Weather In Months Ahead, Scientists Forecast — Global sea temperatures reached their second highest level on record for the month of April, with the European Union's Copernicus Climate Change Service reporting record sea-surface temperatures across much of the tropical Pacific. Scientists say this raises concerns that an El Niño warming cycle is forming, which would temporarily accelerate global air temperature rise and intensify fires, floods and droughts.
  • The Dangerous Effects Of Rising Sea Temperatures — The world's oceans have absorbed 90% of excess heat and about a quarter of human-caused carbon dioxide emissions during the industrial era, and scientists are investigating what drove an anomalous rise in sea temperatures and whether seas will cool again. Researchers caution there is no guarantee oceans will keep absorbing heat at the same rate.
  • Three Tough Truths About Climate — The International Energy Agency's projection for annual carbon dioxide emissions in 2040 has fallen from 50bn tons to 30bn tons, though the world is expected to fall far short of the 1.5°C Paris goal, with warming likely between 2°C and 3°C by 2100. Global energy demand is projected to more than double by 2050.