Bond Market Under Pressure

The bond market is struggling, and it’s not a minor pullback. Oil prices have broken above $100/barrel, adding fuel (literally) to inflation concerns. On top of that, the Treasury’s buyback announcement landed poorly with markets.

A Buyback in Name Only

Bessent announced the Treasury will buy back $6 billion at auction today. For context, that’s a fraction of past QE programs: $1.75 trillion in 2008, $766 billion in 2013, and $1.97 trillion in 2020. Those figures are in trillions, this latest move is in single digit billions.

Bessent also noted the Treasury is looking at $24 billion in buybacks through year-end. Given the scale of past interventions, it’s a modest gesture rather than a meaningful offset to current market pressure.

Producer Prices: A Preview, Not the Full Picture

The Producer Price Index for August showed inflation rising 0.4%, in line with estimates. However, this doesn’t yet capture the oil and gas price increases from mid-August. We’ll get a clearer read when September’s PCE report is released.

The bigger concern is the trend. Wholesale inflation is rising faster year-over-year. While there’s no direct, immediate correlation to consumer prices, wholesalers typically pass those costs along eventually.

Existing Home Sales Soften

Existing home sales fell 2%, while inventory rose 3% last month. This shift is visible both in the data and anecdotally, more listings, less urgency. The market is adjusting to higher rates and increased competition among sellers.

The Takeaway

Higher rates don’t have to mean you can’t find a good deal. A lower purchase price can still result in a manageable payment, even with rates where they are.

Now may be a good time to start looking.

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