The 10-year Treasury note touched 5% today. Fed funds futures now put a quarter point hike Wednesday at 90%.
Brandon Chapman spent today’s session explaining why that hike has close to nothing to do with inflation.
Raising rates won’t rebuild the refining capacity we never built. It won’t bring down oil after we bombed a batch of Russian refiners.
Brandon tracks the real pressure to a different place. The Fed needs the yield spread between us and Japan to stay wide.
The Bank of Japan is raising rates to fight its own inflation. Their Friday policy statement lands right on top of that spread.
Every tick of tightening in Tokyo narrows the gap. Investors who borrowed cheap yen to buy our Treasuries lose their reason to hold them.
Brandon walked through the collateral math, and it’s the part I keep coming back to. A Treasury posted as collateral at 102 that slides to 100 diminishes what you can borrow against it.
That’s how leverage comes out of the yen carry trade. The pace of the yield move matters more than the direction.
Now look at where the damage showed up today. Nvidia sold off hard alongside JPMorgan, Citigroup, and Bank of America.
Brandon groups Nvidia with the banks on purpose. They design the processors, ship them to Taiwan Semiconductor for manufacturing, then finance the sales with a guarantee to take the hardware back.
That makes Nvidia the lender to the entire AI build-out. Rising rates hit lenders first.
Brandon isn’t fighting the tape here. He’s positioning for what happens if the Fed hikes and delivers a softer tone than the market expects.
Here’s what he laid out in today’s video:
- The Ghost Prints Surveillance Console flagged roughly 10,000 TLT calls bought at the 81.50 strike for September 16, plus a 5,001 contract print on the 82.50 calls for September 21.
- Brandon wants the TLT 81 call near 35 cents ahead of Wednesday. It traded at 47 cents on the ask today. A move to 82 by Friday puts that option near a dollar, roughly 180% on the risk at his price.
- A block owner member is up 100% on IBIT today. The 45/47 call spread for September 18 carries a 41 cent cost basis and pays 200% above 46.20.
- Gold fell out of bed, dropping 1.5% and breaking the 400 level on GLD. Bitcoin caught a 2.82% bid, and Brandon is watching whether Treasuries, Bitcoin, and gold all bid together against a weaker dollar.
The Fed statement Wednesday matters less for the number than for the delivery. Brandon says the market’s interpretation of the tone drives the next move in bonds.
Then Friday brings the Bank of Japan with a bond market already selling. Both events hit inside four sessions.
