A Buyback Letdown

The Treasury ups its buybacks (again)... But it wasn't enough for the market... A more successful Treasury intervention overseas... 'AGI' is here... An AI worst-case scenario...

The Treasury ups its buybacks (again)...

Late this morning, the Treasury Department announced that it will buy back up to $6 billion in 10-year and 20-year Treasury bonds at a time. That's triple the typical amount.

The operation will happen tomorrow afternoon, and it will mark the first purchase since the Treasury announced its increased buyback program last month.

As we wrote in the August 19 Digest...

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.

At the time, Treasury Secretary Scott Bessent said that the buyback may be larger than the $4 billion announced and that the Treasury may use its $1 trillion general account to buy back the bonds.

But $6 billion wasn't enough for the market...

Yields spiked after the Treasury's announcement, with the 10-year yield rising to a high of 4.85% – its highest level since October 2023. The 30-year yield is closing in on its highs from August, when the Treasury first stepped in.

The buybacks are an attempt to lower yields and prop up demand for longer-dated Treasurys. Today's move is the opposite of what the Treasury Department wants.

So what's going on?

Well, Wall Street may have gotten ahead of itself. Before the announcement, Bloomberg – citing market strategists – speculated that the buyback figure could be as high as $10 billion.

When you take that into account, "only" $6 billion was a letdown. The market may be trying to push yields higher to see how far the Treasury will go to support U.S. bonds.

As Credit Opportunities editor Mike DiBiase wrote to us after the August announcement, the Treasury's intervention likely won't be enough – and the Federal Reserve will have to step in and launch the next iteration of quantitative easing.

Bessent is 'the house' now...

In his previous career, Bessent worked alongside George Soros to short the British pound and "break the Bank of England" in a trade that ended up making their firm more than $1 billion.

Now, Bessent is on the other side of the trade – working with governments to prevent things from "breaking."

That goes beyond the U.S. bond market. As our colleague and True Wealth editor Brett Eversole explained in the August 12 issue of True Wealth Systems "Review of Market Extremes"...

On July 31, the [U.S. Treasury] stepped in to buy up Japan's currency... stopping its rapid decline. And documents show the U.S. could buy up to $10 billion yen to support the currency.

It worked... The yen has surged from its July low of 163 yen per dollar to about 154 yen per dollar today – the strongest level for Japan's currency since February.

But there are still plenty of traders shorting the yen. As Barchart showed in a post on X, short positions in the yen "remain near the largest in history."

Yesterday, Bessent warned that traders who continue betting against the yen do so at their own risk. From his speech in Texas...

I am the house now. So when we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan, is going to do, what Japanese policymakers are going to do.

In short, Bessent says he knows what's coming. Markets are expecting that will be another rate hike from the Bank of Japan at this month's policy meeting.

U.S. intervention, coupled with another rate hike from the Bank of Japan, could be the end of the "carry trade." As Brett explained in the August issue of True Wealth Systems...

The Bank of Japan has held its interest rate steady at 1% since June. That's significantly below the U.S. Federal Reserve's range of 3.5% to 3.75%. This spread in interest rates has given rise to the "carry trade," in which traders profit from the difference.

Specifically, traders borrow yen at a low rate, then convert the yen to dollars and invest in higher-yielding assets, like U.S. Treasury bonds. They can pocket the extra yield and let it compound over time.

Until Japan's interest rates rise (or U.S. rates fall), traders will keep exploiting the gap, borrowing yen to buy greenbacks.

But as Brett says, "There's growing evidence that the yen's bottom could finally be in."

That's why the True Wealth Systems team recommended a way to profit from a rising yen in the August issue. Paid-up True Wealth Systems subscribers and Alliance members can read the full issue here.

AI takes a huge step forward...

In a post on X over the weekend, Nvidia (NVDA) CEO Jensen Huang congratulated AI startup OpenAI on achieving "AGI" – artificial general intelligence. Put simply, AGI is the step in the AI boom where the models match or surpass humans.

According to the ARC Prize Foundation, which measures progress toward AGI, OpenAI's recently launched GPT-6 Astra model has achieved AGI.

As Greg Kamradt, president of the ARC Prize Foundation said in a statement...

On ARC-AGI-3, Astra surpassed our human action-efficiency baseline on 96% of levels, effectively reaching human parity on the benchmark. Not only is this the best model we've ever tested, but it also represents a meaningful step change in frontier-model performance – not only in its ability to navigate and solve novel environments, but also in how efficiently it learns to do so.

OpenAI also claims to have solved the Navier-Stokes problem – one of the hardest previously unsolved mathematics problems, according to CNBC. It took 10,000 OpenAI agents about 88 hours to solve the 90-year-old problem.

As we have written a few times (here and here), OpenAI had fallen behind competitors like Alphabet (GOOGL) and Anthropic. But with this latest release, it may be taking the lead again.

And the news couldn't come at a better time, with both OpenAI and Anthropic planning to go public soon (Anthropic possibly as soon as next month).

But it comes at a cost...

In a now-viral post on X, former Anthropic and OpenAI researcher Jacob Coxon announced that he had left Anthropic and said the two AI startups are not "acting responsibly" and are "gambling with our lives."

It's not just a case of a disgruntled former employee. In a response to Coxon's post, Evan Hubinger – a current "Alignment Science Lead" at Anthropic – agreed and said he sees a greater than 10% chance that AI kills off civilization within the next 10 years.

The companies themselves are aware of the threat. In its August 2026 Risk Report, Anthropic acknowledged that its AI models are self-improving at a faster rate than it previously thought.

However, we doubt that "AI Causes the End of Civilization" will make it onto the Risk Factors pages of these companies' S-1 filings for their upcoming initial public offerings ("IPOs").

In SpaceX's (SPCX) S-1 filings, the closest we got was, "The global nature of our business poses risks with respect to unstable, malicious or arbitrary legal regimes and authorities."

Of course, the end of civilization is an absolute worst-case scenario. And in previous Digests, we've highlighted how helpful AI can be (like in the July 9 issue).

But with OpenAI's and Anthropic's IPOs looming, every AI headline is going to be under a microscope. And these concerns could take some of the shine away from the AI bubble.

New 52-week highs (as of 9/8/26): Abercrombie & Fitch (ANF), Dorchester Minerals (DMLP), Marathon Petroleum (MPC), ONEOK (OKE), Plains All American Pipeline (PAA), Roivant Sciences (ROIV), USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund (SDCI), Translational Development Acquisition (TDAC), Ternium (TX), and Valero Energy (VLO).

In today's mailbag, a reply to a piece in yesterday's mail... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"N.B.'s comment on resisting the notion the job numbers were tampered is like resisting the notion that the sun will rise tomorrow." – Subscriber Gary S.

All the best,

Nick Koziol
Baltimore, Maryland
September 9, 2026