💡 What I'm Watching This Week
The first Warsh-era Fed minutes and a week of Treasury auctions put one question on the table: who's still willing to fund all this debt, and at what price?
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🙌 What I’m Watching. The levels, catalysts, and signals on my screen this week, so you can start the week a step ahead.
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Who’s going to buy all this debt?
Yesterday’s letter left us at the long end of the bond market, where the 30-year is pushing toward 5% and lenders want a fat real yield just to hold US debt for thirty years. That worry has less to do with this month’s inflation and more to do with how much Washington now has to borrow.
This week we get some more clues to how real that worry is. The government has to go raise the money, out in the open, using important maturities.
Treasury sells 3-year notes Tuesday, 10-year notes Wednesday, and 30-year bonds Thursday. The 10-year lands the same afternoon the Fed releases the minutes from Warsh’s first meeting. So Wednesday hands us two answers to the same question a few hours apart.
Does the Fed have the will to hold the line on inflation? And does the world still want to fund us cheaply while it does?
Pretty quiet calendar otherwise. That’s part of why these few events matter. Less noise to hide in.
Let’s get to it. I’ll start with the minutes everyone’s watching, then the pieces I think matter more.r
📝 The first Warsh-era minutes
Wednesday at 2 p.m. Eastern, the Fed releases the minutes from the June 16-17 meeting, Warsh’s first in the chair. It’s the earliest look we get at what was actually said in the room.
Yesterday we laid out the case that Warsh is quietly dovish under the hawk act, and that his plan runs through a committee that has already pushed back on both halves of it. The bet that AI productivity pulls inflation down for him. And the push toward a cooler way of measuring inflation.
The minutes are where we can check that read against the record.
I’m looking for three things.
How many members lean toward a hike, and how hard. Whether anyone brings up the measurement question, the idea of leaning on trimmed-mean or median PCE instead of core. And any mention of the “first principles” review Warsh keeps floating.
Remember the votes: four dissents at the meeting just before he took over, the most since 1992, and nine of eighteen projections now penciling in a hike this year.
One note that cuts his way. Micron just reported a strong quarter, another sign the AI buildout is still running hot. That helps his productivity argument a little, even if most of his committee still won’t buy it.
How I read it: the minutes tell us about the Fed’s will. Will is only half of it, though. That same afternoon, the market gets to vote with real money on whether it believes any of it.
That vote is the auctions, and I think they matter more.
