The Bond Market Is Trapping The Fed | Weekly Roundup

**Felix** (0:00)
Nothing said on Forward Guidance is a recommendation to buy or sell any investments or products.
All right, what's going on, everybody? Welcome back to another round of edition Forward Guidance. We are finally on the other side of Labor Day. We're into September. It's time to lock in. No more nonsense, no more traveling, Quinn. It's the lock-in season. What's up, how are you?

**Quinn** (0:27)
I'm back, I'm back. Yeah, came a little under the weather on some travel back, but we're here and ready for whatever the market's thrown at us.

**Felix** (0:38)
So, hell yeah, I love it. How are you doing?

**Quinn** (0:40)
You up in New York?

**Felix** (0:41)
Yeah, in New York at the old BlockWorks HQ this week. Yeah, man, it's good to be here. Good to be a nice way to start off post Labor Day, just really focusing in, getting a lot of work done out here. So it's been good. Things are ripping, man.

**Quinn** (0:58)
Nice. Yeah, surely in the markets, too.

**Felix** (1:03)
Yeah, we all have to talk about, before we do, just want to do a quick shout out to our upcoming conferences. Digital Elastic Summit Asia coming up real quick here in October 7th. Off the back, we're in the same venue, same partnership. We're working with Token2049. So if you're there in Singapore for Token2049, we're also going to be hosting a partnership with them, Digital Elastic Summit, in the same venue on October 7th. We have a pretty stacked line up, some really great people there. Quinn and I are going to both be there on a couple of panels.
Should be a ton of fun. We also announced the Digital Elastic Summit London speaker list. That's starting to rip out through too, and that's happening in November. So big couple months. Don't slack on getting your ticket, get it early.
We'll have a link in the bio here in the description. And yeah, we're going to be both at the London one as well. So it should be a lot of fun. It's going to be a sick couple months. So come out and yeah, listen to us and hang out in person. It'll be a good time.

**Quinn** (2:01)
Can't wait, man. Time's fine. I can't believe I got to board a plane again in a couple of weeks.

**Felix** (2:08)
I know. Suddenly it's like fall hits. I'm just like traveling all over the place and it's just like show time.
All right. So obviously we got plenty to talk about. We're recording here Thursday, so day before CPI, but we did get the PPI print today. Markets are reacting pretty aggressively. Before that, let's talk a bit about what's going on with, what Besson is starting to call himself now, which is he's proclaiming that he's the house now. I have a pretty good insight into what the Japanese, what the Bank of Japan is going to do, and you can bet against me if you want. So yeah, obviously we had the announcement of the buybacks actually occur a couple of days ago.
And initially, he was talking about, so traditionally, the long end buybacks have been 2 billion. He said it'd be at a $4 billion minimum of buybacks. And he came out and announced that it would actually be $6 billion. So that was above his initial guidance of a 4 billion. But even regardless of that, we still saw the long end sell off further and yields go higher. So, you know, seems like market is saying we need more. If you're really going to try and fight us, if you can try and fight the bond market, you got to use a lot more ammo, man. If you want to say that you're the house, you got to act like it. That's kind of seems like what the bond market's saying. What's your read, Quinn?

**Quinn** (3:26)
Yeah, I think when these events occur, they display the political incentives that drive behaviors of politicians and policymakers once they're in charge. So there's obviously, everyone's aware of the kind of hot takes and criticisms that Besson and probably many on his team have had about how previous administrations have operated at these roles in the Treasury and also at the Fed.
And it's easy to say when you're on the outside. And Besson, if you were to move him from his current role, 1,000% would be reacting in a similar way as that truck letter, if it were someone else and he was on the outside looking in. So it's just interesting to me because he obviously knows, like he's very, very intelligent guy. He knows these things and what they cause in the ramifications. But again, the political incentives are so strong that they make people do things that they know probably shouldn't be done. And so that's crazy to me because obviously we have midterms coming up. And he's well aware of what ultimately when you suppress yields and manipulate currencies lower, those are inflationary. And it's kind of one fighting the other.