OIL: Oil Down Today but Set for Weekly Gain

Zerohedge wrote an article highlighting the recent increase in Treasury buybacks and asks is this Scott Bessent stepping in ? https://www.zerohedge.com/markets/its-treasury-vs-fed-fed-sidelined-bessent-unleashes-record-10-billion-bond-buyback

• “Scott Besent revealed that he has breakfast with Powell every week, and also said that if the Fed does nothing, he might take matters in his own hands, and since the Treasury has a "big toolkit" one of the things it could do is "up the Treasury buybacks"
• “Six weeks later, with the Fed sidelined and unwilling to do anything to ease the plight of US treasuries which continue to trade at dangerous levels - the 30Y is flirting with a 5% level - it appears this is what Bessent has done.”
• “At 2pm on Tuesday afternoon, the Treasury announced the results of its latest Treasury buyback operation. While the operation itself was not remarkable - the Treasury had been holding these more or less weekly since April 2024 - the size of it was: at $10 billion, this was the largest Treasury buyback operation in history.”
• “And while the maturity range of the cusips accepted for buyback was of low duration, in the interval between July 15, 2025 and May 31, 2027, we are about to see sizable increases in the total buyback size of longer duration treasuries.”
• “Sure enough, tomorrow at 2pm, the Treasury will complete a buyback focusing on Treasuries maturing in the 2036-2045 interval, i.e., 10-20 year paper, and the maximum amount to be redeemed will be $2 billion, up 100% from the last such buyback on May 6, when the maximum amount to be redeemed was $1 billion.”

• “In fact, the last time there was a treasury buyback anywhere close to today's amount was in mid/late April when Treasuries were tumbling and when someone had to step in and cushion their fall.”

  Fig 1 : Treasury Debt Buyback

  

  Source: Zerohedge

The TYU5 range has been 110-15 to 110-18+ during the Asia-Pacific session. It last changed hands at 110-17, up 0-02 from the previous close.

• The US 2-year yield is unchanged, dealing around 3.947%.
• The US 10-year yield has edged lower, trading around 4.446%, down 0.1 from its close.
• Jens Nordvig on X: “It is rare for the Fed to set rates at a level similar to nominal GDP growth. Normally, there is a large gap, with nominal policy rates well below nominal growth. The last times we were here were in the early 2000s and around 2006-2007. Something to think about.”(Graph Below)
• MNI US: Senate GOP Conference To Meet Weds To Discuss Accelerated Megabill Schedule: Laura Weiss at Punchbowl News reports on X that Senate Republicans will hold an all-conference meeting to discuss the 'One Big Beautiful' reconciliation bill on Wednesday afternoon.
• The 10-year yield continues to find good support around 4.35/40%. Yields need to hold above this area to continue to build for a move higher.

• Data/Events: ADP, S&P Services PMI, ISM Services Index, Fed Beige Book

  Fig 1: Fed Funds Effective rate vs Nominal GDP Growth

  

  Source - Jens Nordvig/Bloomberg

After an exceptional period of inflows into the major markets, it appears that this trend has stalled for now as constant daily flows are interrupted with outflows, with Taiwan, Indonesia and India the latest to experience a significant outflow.

• South Korea: Recorded inflows of +$172m the 2nd,  bringing the 5-day total to +$265m. 2025 to date flows are -$11,205. The 5-day average is +$53m, the 20-day average is +$53m and the 100-day average of -$112m.
• Taiwan: Had outflows of -$351m as yesterday, with total outflows of -$3,109 m over the past 5 days. YTD flows are negative at -$13,128. The 5-day average is -$622m, the 20-day average of +$165m and the 100-day average of -$138m.
• India: Had outflows of -$246m as of the 2nd, with total outflows of -$383m over the past 5 days.  YTD flows are negative -$10,774m.  The 5-day average is -$77m, the 20-day average of +$58m and the 100-day average of -$114m.
• Indonesia: Had outflows of -$45m as of yesterday, with total outflows of -$126m over the prior five days.  YTD flows are negative -$2,943m.  The 5-day average is -$25m, the 20-day average +$6m and the 100-day average -$30m.
• Thailand: Recorded outflows of -$47m as of 29th, outflows totaling -$84m over the past 5 days. YTD flows are negative at -$1,755m. The 5-day average is -$17m, the 20-day average of -$2m and the 100-day average of -$18m.
• Malaysia: Recorded outflows of -$29m as of yesterday, totaling -$254m over the past 5 days. YTD flows are negative at -$3,452m. The 5-day average is -$54m, the 20-day average of +$8m and the 100-day average of -$25m.
• Philippines: Saw inflows of +$3m yesterday, with net outflows of -$255m over the past 5 days. YTD flows are negative at -$512m. The 5-day average is -$51m, the 20-day average of -$13m the 100-day average of -$5m.