The Treasury steps in to push yields lower... What more QE means in the short and long terms... The AI-debt part of the story... The bad news keeps piling up for OpenAI...
That didn't take long...
Just yesterday, we wrote about the multidecade high in the 30-year Treasury yield. Between weak demand at last week's Treasury auction, ever-growing government deficits, and the ongoing conflict with Iran, investors have been staying away from long-dated U.S. debt.
This morning, the government stepped in to provide support...
In a press release, the Treasury Department announced that it will at least double the size of its long-dated Treasury (10-year to 30-year) bonds-buyback program.
Starting on September 9 (and running until the day after midterm elections), the Treasury will buy back $4 billion of U.S. debt at a time. That's double the current $2 billion rate.
According to the Treasury Department's buyback schedule, there are seven instances when it can choose to buy back debt over that two-month period.
The announcement was exactly what investors wanted to see. Treasury yields plummeted, with the 30-year Treasury hitting a two-week low. All three major U.S. stock indexes finished higher.
We have another name for this operation...
In its statement, the Treasury said the change reflects its "desire to provide greater liquidity support" for longer-term U.S. debt. In short, the government is stepping in to buy bonds and push yields lower.
That's the hallmark definition of quantitative easing ("QE"). And as we said yesterday, it's something that Credit Opportunities editor Mike DiBiase predicted all the way back in January.
From that issue of Credit Opportunities...
It's clear the only way the [Federal Reserve] is going to get long-term rates down is by buying loads of long-term Treasurys.
This is what we predicted the Fed would do in response to the next recession in our December 2024 issue. We said the central bank would ramp up its [QE]... buying billions of dollars of Treasurys in the open market to drive down long-term interest rates.
While this isn't the Fed itself stepping in to buy bonds, Mike's prediction has come true. We're seeing government intervention to bring yields down.
And intervention from the Fed is on the way. As Mike wrote in a private note this morning...
If Treasury purchases aren't enough to move the needle on long-term interest rates – and I don't think they will [be] – you can bet Fed purchases (with newly printed money) will be the next weapon of choice.
The increase in liquidity is going to be great news for assets in the short term. More from the January Credit Opportunities issue...
This will finally bring down longer-term interest rates as [President Donald] Trump so desperately wants. It will also boost asset (like Treasurys, stocks, and bonds) and commodity prices.
We saw that in the market today. Further intervention will boost these assets even more in the weeks and months to come.
But looking further out, Mike says the increase in liquidity will bring "twin peaks" inflation like we saw in the 1970s. We already saw signs of that today, with the U.S. Dollar Index hitting its lowest level since May.
If inflation does become a problem, the Fed would have to quickly reverse course and raise rates. Mike believes that change could give his subscribers the shot to earn equity-like returns without taking on equity-like risk as rates spike back higher.
And Mike, alongside analyst Bill McGilton, has already identified the next opportunity to do just that. Credit Opportunities subscribers can read all about it in this evening's issue. If you don't have access already, click here to learn more about Credit Opportunities.
The AI part of the Treasury story...
CNBC, citing "market experts," says that an increased supply of corporate debt has given investors an alternative to government debt. Specifically, the article cited debt from companies in the AI space.
Those "experts" may have a point.
More from Mike this morning...
In other words, investors would rather buy long-term bonds from hyperscalers than the U.S. government. If you look at the credit profiles of the two, the hyperscalers are in much better financial condition. There has been such a big supply of this debt recently that they think it's affecting the Treasury market.
That's a story we've been following for months. Nvidia (NVDA), Amazon (AMZN), and Alphabet (GOOGL) have all launched massive bond sales recently. Bank of America estimates that we'll see $200 billion in hyperscaler debt offerings in both 2026 and 2027.
That would mean the hyperscalers are closing in on the six largest banks in the U.S. in terms of total debt. And since some of the hyperscalers – like Alphabet and Microsoft (MSFT) – have credit ratings that match or even exceed the government's, investors are turning to them rather than to government-debt auctions.
We know that the hyperscalers are going to keep spending. And since they're essentially out of free cash flow, they're going to have to offer more debt to raise capital.
That'll give investors plenty of chances to buy. But if investors favor hyperscaler debt over Treasurys, yields may remain higher – pushing the Fed into action.
Meanwhile, the bad news is piling up for OpenAI...
Over the past week, the AI startup announced that both Chief Operating Officer Brad Lightcap and Chief Revenue Officer Denise Dresser have left the company. Dresser had been in her job less than a year, and in April, the company lined her up to take over most of Lightcap's role, according to CNBC.
Last night, a separate report from the Wall Street Journal published OpenAI's financials for the second quarter.
In June, we dove into a Financial Times report about the company's 2025 numbers. And they weren't pretty. As we wrote in the June 17 Digest...
Last year, OpenAI brought in about $13 billion in revenue – more than triple its sales in 2024.
But spending surged alongside revenue...
Last year, OpenAI reported $34 billion in costs and expenses, up from $12.4 billion in 2024. Altogether, OpenAI's loss from operations grew to more than $20 billion last year from "only" about $9 billion in 2024.
And the numbers still aren't pretty this year...
In the first six months of 2026, OpenAI's losses have gotten even worse. In the first quarter, OpenAI reported an operating loss of $9.3 billion. That grew to a loss of more than $12.3 billion in the second quarter.
So OpenAI's operating losses in the first six months of this year have already surpassed all of 2025. Even while revenue has grown to $12.4 billion year to date – almost matching 2025's total – the losses continue to balloon.
Between executives leaving, growing losses, and falling behind its chief rival, Anthropic, OpenAI has had a lot of negative press in recent weeks. And it'll find itself even further under the microscope when it finally goes public.
OpenAI confidentially submitted the S-1 filing for its initial public offering ("IPO") in June, but it didn't offer a time frame for when the offering would actually happen. In June, the New York Times reported that the company had pushed those plans back to 2027.
In the June 30 edition of his free daily e-letter, Stansberry's Investment Advisory editor Whitney Tilson said he was "not surprised" OpenAI pushed back its IPO. He cited OpenAI's "staggering, accelerating losses" as a big reason why.
Put simply, when investors get the full financial picture of OpenAI, Whitney believes they'll "reject" the company's plan for a $1 trillion valuation.
At a time when AI companies are scrambling to secure capital, OpenAI is holding back on tapping into retail investors. And with growing losses and around $1 trillion in spending commitments, it's easy to see why.
We'll be keeping a close eye on the situation. If investors do reject OpenAI, it could mark the end of the AI boom. Until then, the spending is going to continue. And now the government is working to boost liquidity. That'll keep the good times rolling in the short term.
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In today's mailbag, thoughts on the title of yesterday's Digest – "We're Heading Toward a Credit Crisis" – and more thoughts on the "shape" of the U.S. economy... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Corey, we were heading to a credit crisis long before now. This headline was relevant years ago. Meanwhile the governments continued to spend recklessly..." – Subscriber Rodger G.
Corey McLaughlin comment: I don't disagree. With yields rising to decades-high levels, though, yesterday seemed like a good time to revisit the subject.
"I think we should all start referring to the BSPOBS ['big steaming pile of BS'] economy, and give Alliance Member Greg F. full credit therefor. Bravo." – Subscriber Sherwin R.
All the best,
Nick Koziol
Baltimore, Maryland
August 19, 2026
