https://youtu.be/Bq4K0CrBVnU 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

https://youtu.be/RgtNLDsYx80 The S&P futures closed at 7660. That’s the exact upper edge of the volatility box I’ve been marking since May. Every time we’ve tagged 7660, this tape has turned into a crap fest. We closed spot on it Friday. Friday looked like a snapback rally. I care far more about the other thing that snapped back. Correlation came back. We opened with 93 products trading on one side of the market, and I haven’t seen an open like that since April. That isn’t a bullish read or a bearish read. It tells me the index is getting ready to move after four and a half months stuck in the same range. The VIX argued the opposite. It measures 30-day implied volatility, so it can’t see short duration options at all. Short duration vol went up on Friday. The VIX feels like the last instrument to know. Look at the

https://youtu.be/hQH7tBfzBv8 Blake Young pulled up the Fed Watch tool today. A rate hike at the September 16th meeting now prices in at 71.4% probability. That number sat at 50/50 a week ago. Yesterday it jumped to 61%. Today it’s 71%. Crude oil was behind all of it. Today, it’s trading past $100 a barrel. PPI printed 0.4% month over month, right in line with expectations. Blake zeroed in on a detail nobody headlined. That 0.4% is four times last month’s number after revisions. Core PPI actually slipped from 0.3 to 0.2. Almost all of the producer inflation traces back to oil and energy. Oil and energy feed 17% of CPI directly. Oil added another 10% in the last three days. None of that appears in today’s report. At minimum, Blake expects next month’s PPI to climb 0.2%. He sees a path toward 1% or even 1.5%. Bonds are already voting

https://youtu.be/FKo9cf7frLo Brandon Chapman says market vulnerability is the highest he’s seen in a long while. The yen is the reason. This morning the Treasury bought back only $6 billion in bonds. Expectations sat near $10 billion. Yields broke loose. The 10 year pushed to a yield of 4.857%. That’s the highest we’ve been all year. Brandon backed the chart out three years. We’re breaking through and testing the high from October 2023. A stellar seven year note auction pared some of the losses. Brandon still pulled up the SPX at nine o’clock his time and showed a direct positive correlation with bond prices. The yen is what makes this bigger than a bond story. It strengthened against the dollar today. It strengthened against the euro and the pound too. Brandon calls it a bigger move than the one we saw at the end of July. He wants to know whether