Fixed Income Morning Economic Report, 8-25-26

Initially overnight pressure sent USTs to a 108-11, just shy of Monday's 108-08+ low. Since, comments by US Treasury Secretary Bessent who has reportedly formulated a plan that could escalate if the "bond vigilantes" continue to push up interest rates, NY Post reports citing sources that he is looking to put the "fear of God" into bond vigilantes Bessent is said to be particularly worried that institutional investors will continue to sell long-dated UST bonds, leading to the US 10yr yield hitting 5%. Apparently, the plan could include temporarily halting the issuance of certain long-dated debt, such as the 20yr (better than arresting all the traders I guess) and this news has sent the USTs up to the high of the session at 108-21+, meanwhile SFRZ6 is sitting unchanged at 96.025 having had a teeny 96.015 to 96.03 range, still implying a 38% chance of 2 hikes before the year is out. The rally has also been helped by energy pressure, as sources report that the US told Pakistan to tell Iran that it would halt the siege and lift sanctions under the MOU, if Hormuz opens and proxy attacks stop. We now await an update from Iran, who are said to be consulting and are expected to respond soon. Ahead, USTs look to 2yr supply, in addition to a handful of data points.

On the docket today (CT); 7:30 AM FRB Richmond President Thomas Barkin speaks at Montgomery County Chamber of Commerce event 8:00 AM S&P Cotality Case-Shiller Home Px Index Jun. 9:00 AM New Home Sales Jul. 9:00 AM Conference Bd - Consumer Confidence Aug. 3:00 PM FRB Richmond President Thomas Barkin speaks at Charlotte Regional Business Alliance event