Morning Brief: Bessent Hints At Expanded U.S. Treasury Buybacks; Oil Rally Rekindles Inflation Fears

Core Snapshot

🏛️ Treasury Secretary Bessent indicated the U.S. Treasury may scale up its bond buyback program. He noted the Trump administration plans spending cuts to counter the sharp surge in long‑term Treasury yields.

🛢️ Threats to impose the harshest‑ever sanctions on Iran drove crude oil higher. WTI rose 2.33% to $87.83 per barrel, Brent climbed 2.36% to $93.78 per barrel, stoking renewed inflation concerns across markets.

I. Market Outlook

Key Events

‑ 🏛️ Bessent floats expanded Treasury buybacks: In a CNBC interview, Bessent said Treasury could boost buyback sizes, “individual operations may even exceed $40 billion”. He added the Trump administration intends spending cuts to cool the rally in long‑dated yields. → 10‑year Treasury yield rose 4.5 bps to 4.698%; 30‑year yield gained 4.4 bps to 5.238%. Markets remain skeptical about the effectiveness of Treasury intervention, sending yields back higher.

‑ 🛢️ U.S. teases historic maximum sanctions against Iran: Bessent confirmed Washington will roll out its toughest‑ever sanctions package against Iran, prioritizing economic pressure instead of launching large‑scale new military campaigns. → WTI crude +2.33% at $87.83/bbl; Brent crude +2.36% at $93.78/bbl.

Exclusive View

Bessent’s comments acknowledge severe risks from soaring long‑end yields, yet the proposal for larger buybacks remains rhetorical for the time being. Diminished market confidence in Treasury intervention has pushed yields upward again. The oil price advance represents a more concrete risk factor. The historic heavy‑weight sanctions will tighten restrictions on Iranian oil exports. Even as odds of large‑scale military conflict recede, structural supply tightness persists.

II. Overnight Market Performance

‑‑ US Equities: Dow Jones ‑1.32% at 52759.21; S&P 500 ‑0.87% at 7641.16; Nasdaq Composite ‑1.00% at 26067.17.

‑‑ European Equities: STOXX 600 ‑0.12% at 650.35, seven consecutive losing sessions, the longest losing streak since September 2023.

‑‑ Fixed Income: 10‑year US Treasury yield +4.5 bps at 4.698%; 30‑year yield +4.4 bps at 5.238%.

‑‑ Commodities: Sep WTI crude +2.33% at $87.83/bbl; Brent crude +2.36% at $93.78/bbl. Spot Gold +0.08% at $4519.36/oz; Silver +1.16% at $68.0944/oz.

‑‑ FX: US Dollar Index +0.06% at 98.89; EUR/USD flat at 1.1678.

‑‑ Crypto: Bitcoin surged over 4.8%; Ethereum gained 2.84%, hitting an intraday high of $2359.54.

III. Macro News

1. 🏛️ Bessent: Treasury may ramp up bond buybacks, Trump admin pursues spending cuts

Bessent argued multi‑decade highs in long‑term yields are disconnected from real‑world economic fundamentals. Treasury may lift buyback capacity, “individual operations may top $40 billion”. The Trump administration is pushing spending cuts to cap yield increases.

Insight: Framing higher long‑term yields as misaligned with fundamentals, paired with buybacks and fiscal tightening, shows officials are alive to catastrophic fiscal risks posed by rising interest rates atop the $40 trillion national debt.

2. 🛢️ U.S. prepares record‑heavy sanctions against Iran, crude prices surge

Bessent emphasized economic tools will take precedence over large‑scale military operations to contain Iran. Saudi June crude exports rebounded to 3.993 million bpd from 3.434 million bpd, though still below pre‑conflict volumes.

Insight: Unprecedented sanctions will further curb Iranian oil shipments. Oil gains stem both from sanction expectations and tangible supply shocks stemming from ongoing disruptions across the Strait of Hormuz.

IV. Corporate News

1. 🚀 Anthropic targets record‑size IPO seeking to outpace SpaceX; annualized revenue exceeds $65 billion as AI‑firm IPO competition intensifies.

2. 🤖 OpenAI CFO discloses Q3 ARR rose 35%, targeting an IPO in 2027 or earlier. The update was shared during an all‑hands internal meeting.

3. 🛒 Walmart Q2 same‑store sales growth hit a six‑year low alongside downbeat profit guidance. Shares slumped over 9%, pointing to cooling consumer spending momentum.

V. Today’s Focus

· 📊 August manufacturing, services and composite PMI for US, Eurozone, UK, Japan. This cross‑border dataset arrives right after the oil price rally, to quantify how higher energy costs weigh on real‑economy activity.

· 🇯🇵 Japan July CPI: critical metric shaping Bank of Japan rate‑hike expectations.