Newsletter · 2026-08-25 · Ashutosh Agarwal

The Debasement Trade Goes Vertical as Bitcoin Gold and Silver Surge Into Jackson Hole - US Macro Recap - Week of August 25, 2026

Rates and macro recap for the week of August 25, 2026. Across the podcast tape the debasement trade went vertical, Bitcoin, gold and silver surged while the dollar sold off, bond desks called the Treasury buyback too small to work, and a quiet change to how Washington measures inflation landed days before Kevin Warsh's Jackson Hole debut.

US Macro Recap

Week of August 25, 2026: The Debasement Trade Goes Vertical as Bitcoin Gold and Silver Surge Into Jackson Hole

Last week the U.S. Treasury blinked and started buying the long bonds nobody else wanted. This week we found out what the market thinks of that plan: it bought gold, silver and Bitcoin with both hands, sold the dollar, and split into two camps, one saying the government just chose inflation on purpose, the other saying the buyback is far too small to matter anyway. And underneath all of it, a quieter story broke that almost nobody outside the wonk world noticed: Washington is about to change how it measures inflation, and the new math makes it look lower. All of this is happening days before the new Fed chair, Kevin Warsh, gives his debut speech at Jackson Hole at the end of this week.

TL;DR

The "debasement trade" went vertical. Bitcoin had its biggest week in history, up about 23%, a move so large it happens roughly once every few years, while gold ran ~14% for the month and silver pushed toward $71. The through-line across the podcasts: when a government prints and intervenes to hold bond yields down, the pressure escapes into hard assets and the currency. That's now the consensus positioning among the people actually running money in commodities and crypto.
The bond desks are calling the buyback too small to work. BMO's rates team put a number on it, the Treasury is adding only about $14 billion a quarter of extra long-bond buying against a $40 trillion-plus debt pile, and JPMorgan's FX desk called it "tactically small" next to a $32 trillion market. Last week's story ("the Treasury can override the bond market") is already being openly doubted by the professionals.
Strip out AI and energy, and the economy is barely moving. David Rosenberg laid out the sharpest version of the soft-underbelly case: real growth has run below 1.5% for three straight quarters (a fourth likely), corporate profits outside AI and energy are growing under 5%, and the savings rate has been cut in half. His call: the Fed's next move is a cut, not a hike.

What's new

1. Washington is quietly rewriting the inflation formula, right before Jackson Hole. (Reporting; the sleeper story of the week.) On Marketplace (August 20), reporter Kristin Schwab explained that the Bureau of Economic Analysis is changing how it calculates the PCE price index, the Fed's preferred inflation gauge, starting with next week's report. The old formula currently shows PCE inflation at 3.7%; economists told Marketplace the new method, which adjusts how it treats AI-driven computer-software prices plus investment and legal services, will make inflation look "maybe a tenth of a percent to three-tenths of a percent lower." Moonsub Lee of UC San Diego said "BEA is revising its recipe based on how the world is changing." Alan Detmeister, a former Fed economist now at UBS, was more pointed: it "doesn't mean the BEA is cooking the books, but it does raise an eyebrow" that this is happening when "you have an administration that has been talking about how they need to get inflation down." Why it matters: a lower inflation print, arriving days before Warsh's Jackson Hole debut, buys the Fed cover to hold rates rather than hike, a change in the scoreboard, not the game.

2. Bitcoin's biggest week ever, and gold and silver went with it, the debasement trade is now mainstream. (Fund manager / operator voice.) On The Pomp Podcast (August 22), Jordi Visser of VisserLabs called Bitcoin's ~23% weekly surge "a seven-sigma week", a move so extreme that "there's only been three in the last decade that were greater than five" (the prior two, in April 2019 and January 2023, both kicked off big rallies). He tied it directly to policy: the Treasury's debt-buyback change, plus the yen intervention (Japan's first since 1998), signal a government that "wants to run things hot," and he noted a Treasury secretary "quoting Satoshi" and a Fed chair, Warsh, "who is a Bitcoin lover." He also flagged Stan Druckenmiller's latest filing showing purchases of crypto, Bitcoin miners and Hyperliquid as the "traditional finance" validation. His framing: gold, silver and Bitcoin rising together is "not just a debasement trade, it is a scarcity trade," and with company earnings threatened by AI competition, "60/40 is broken, you can go 60% equities, 40% Bitcoin and replace your bonds with Bitcoin." The metals confirm it: on The KE Report (August 22), Chris Temple noted gold is "up 14% this month" with the miner ETFs GDX and GDXJ up roughly 40%, while Saxo Market Call (August 21) flagged gold clearing its 200-day average near $4,500 and silver pushing toward $71. Why it matters: this is no longer a fringe gold-bug position, it's how a wide range of investors are now hedging a government that has openly chosen to hold yields down.

3. The bond desks say the buyback is too small to do the job. (Sell-side rates and FX desks, the professionals.) On Macro Horizons (August 20), BMO's Ian Lyngen put hard numbers on the intervention: the Treasury was already buying up to "$38 billion this quarter," and the increase adds "at least an extra $14 billion" in the 10-to-30-year part of the curve. His verdict: an extra $14 billion a quarter "is not being viewed as sufficient to offset the true fundamentals", a deficit, funding needs and a higher neutral rate, especially with headlines that U.S. debt has now topped "$40 trillion." The long bond rallied about 10 basis points on the news and then gave much of it back, because "the bearish fundamentals... haven't changed." JPMorgan's FX strategists on At Any Rate (August 21) agreed the buyback is "tactically small relative to the $32 trillion Treasury market." Why it matters: last week's headline was "the Treasury flinched." This week the people who trade Treasuries for a living are saying it flinched with a squirt gun.

4. Rosenberg: take away AI and energy, and there's almost no economy left. (Economist / strategist; the fragility case.) On Wealthion (August 21), David Rosenberg made the most rigorous bear-lite argument of the week. Yes, nominal GDP is running "five, six percent" and second-quarter profits grew ~20%, but "X AI effect and X energy, corporate profits are running less than 5% year over year." AI capital spending is "7% of GDP" and up "16% in the past year" in real terms, "but there's another 93% out there of GDP", housing, commercial construction, the old industrial economy, where capex is "modestly negative." His clincher: real GDP has grown below 1.5% for three straight quarters and probably a fourth, versus the Fed's own 2% estimate of the economy's potential, which "builds up slack" and "triggers disinflation." He expects inflation "to surprise to the downside for the next several months" and thinks the Fed's next move "will be to cut rates, not to raise." He also flagged that the savings rate has fallen "close to 5%" a year ago to "around 2.5% right now", the only reason spending is outrunning stagnant incomes. Why it matters: this reframes the whole "resilient economy" story management and the Fed keep repeating, Rosenberg's point is that resilience is really just AI, energy, and a shrinking savings buffer papering over a weak core.

5. Darius Dale: fair value on the 10-year is 5.75%, and the Fed is being quietly rewired to ease. (Research shop running real-money strategies.) On Macro Voices (August 20), 42 Macro's Darius Dale said his model pegs fair value on the 10-year Treasury yield at "5.75, 5.80" and the 30-year "close to 6.50", well above today's levels, because the global pool of savings is shrinking (growing "about 55%" over the trailing decade versus a long-run average "around 90%") just as the Treasury has to compete with a massive new borrower: AI. But his more provocative claim was about the Fed itself. He argued Warsh's new internal "task forces" (on communications, the balance sheet, data and inflation) are cleverly designed to move the Fed toward easing "without him telling them to go there", better labor data will reveal a weaker jobs market (the U.S. is "losing about 500,000 to a million jobs every year" once official revisions land), and better real-time inflation data will read "more dovish" than current figures. Net: "Fed policy is going to get substantially more dovish next year than what's currently priced in." Why it matters: it's a way to reconcile the two big fears, higher yields now (too much borrowing, too little saving) and a more dovish Fed later (a labor market that's weaker than the headlines).

The debate

This week's podcasts split three ways, and the fault line has shifted. It's no longer just "will the Fed hike?", the September hike is now widely treated as off the table. The real argument is about what the government's intervention means: a soft landing that lets the Fed relax, a fragile economy that forces it to cut, or a deliberate choice to inflate. As always, people running real money are separated from commentators offering a take.

Camp A, Soft landing; the data lets the Fed stand pat. Supported, and it's the operators' camp. The steel-man: growth is fine, inflation is drifting down, and financial conditions are actually easing, so the Fed can simply wait. On Bloomberg Surveillance (August 18), BMO's chief FX strategist Mark McCormick said that despite the backup in yields, "the Bloomberg Financial Conditions Index has eased. So the Fed is not tightening", and he's targeting a stronger dollar (DXY to 103 from ~99.6), a contrarian call against the whole weak-dollar crowd. In the same episode, JPMorgan Asset Management's Kay Herr said she keeps "almost half" her portfolio in Treasuries while picking up "90 basis points, 100 basis points over Treasuries" in high-grade corporate bonds from AI-related issuance "without a lot of additional risk," and took comfort that "we have not seen any wage inflation." BMO's rates desk on Macro Horizons has Q3 GDP "tracking above 4%." The soft spot in this camp: even its members admit the buyback won't hold yields down on its own.

Camp B, Stall speed; the economy is more fragile than it looks, and rates will have to come down. Supported by economists and allocators. The steel-man: outside AI and energy the economy is stalling, the consumer is running on a thinning savings cushion, and disinflation is coming the hard way. Rosenberg on Wealthion owns this case (sub-1.5% growth, savings rate halved, next move a cut). Darius Dale on Macro Voices adds the labor mechanism, hundreds of thousands of jobs quietly revised away each year. And Charles Schwab's Liz Ann Sonders, on Bloomberg Surveillance, warned the blistering Q2 earnings, consensus went from "24% growth" on July 1 to "over 50%", is "probably not long-term sustainable," a parabola that has to fade.

Camp C, Reflation by choice; the government is printing to hold yields down, so own hard assets. Supported, and it owns the debasement trade, mostly commentators, but a few operators. The steel-man: the yen intervention, the repo facility and now the buyback are one continuous policy of holding yields down and letting the currency and inflation absorb the strain. On Forward Guidance (August 20), the hosts called it a "debasement regime" and a "fiscal operation twist", issuing more short-term bills to buy back long bonds, arguing "they are choosing the inflation and debasement path to support markets." Jordi Visser on The Pomp Podcast frames the government as wanting to "run things hot." Peter Schiff, on The Peter Schiff Show Podcast (August 20), a commentator, reads the buyback as "a Hail Mary" that forces the Fed toward QE.

The subplot under all three: the BEA's inflation-formula change on Marketplace. A lower headline helps Camp A (cover to wait), fits Camp B (real disinflation), and enrages Camp C (the goalposts are moving). Everyone's watching the same number; it's about to be measured differently.

The trades in play

Instrument-level positioning was unusually concrete this week and clustered around one idea: get out of long-dated bonds and into hard assets and the front end. Operators actually moving money are separated from commentators offering a view.

Operators (positioning real money):

Own the front end and AI-issued corporate bonds; avoid duration (Kay Herr, JPMorgan Asset Management). On Bloomberg Surveillance (August 18), Herr holds "almost half" in Treasuries and is harvesting "90 to 100 basis points over Treasuries" in high-grade corporate paper from hyperscaler (big cloud company) issuance "without a lot of additional risk." Her nightmare: "the term premium continues to increase and the Fed loses control of the long end."
Cash, money markets and gold, the U.S. bond market is starting to look like an emerging market (Rebecca Patterson, CFR). On Bloomberg Surveillance (August 21), the veteran allocator (formerly Bessemer Trust and Bridgewater) said she'd "prefer to be in cash or short-term fixed income and other types of diversifiers, dare I say it, gold," because the 30-year at 5.24% isn't worth the risk with debt-to-GDP "around 100 percent and poised to go towards 120." Asked if U.S. Treasuries now trade like a developing market: "A little bit, yes." Her fear is an "ugly" forced austerity triggered by an AI stock-and-debt selloff, sticky inflation, or a French debt crisis spilling over.
Long oil, gold, Bitcoin and energy stocks; short the dollar and tech (Forward Guidance hosts). On Forward Guidance (August 20), the team is long oil futures (with "20-plus percent" annual carry, "like almost 30"), long the energy ETF XLE (which "broke out from the highs in the end of March"), long gold and Bitcoin as debasement hedges, short the dollar, and looking to short the Nasdaq and semiconductors into the Anthropic IPO expected in October.
Long copper and refiner Valero; long gold on central-bank demand (Bobby Schwartz, Avos Capital). On The Derivative (August 20), the ~$300M multi-asset commodity shop is long copper via physical-stockpiling plays and Valero on cheap refining "crack spreads," and structurally bullish gold, noting China channels "7 to 11% of its trade-surplus dollars" into it.
Long AUD and NOK, funded by Swiss francs and Swedish krona (JPMorgan FX desk). On At Any Rate (August 21), the desk turned dollar-bearish after the buyback but stressed the move depends far more on the Fed and the data than on this "tactically small" intervention.
Software over semiconductors, plus Occidental and CBOE (registered advisor, "Investing Experts"). On Investing Experts (August 20), the manager is long Intuit and ServiceNow, betting software outperforms semis when the options-driven chip rally unwinds, plus Occidental (a valuation gap vs. gold/silver) and CBOE, and has been "bearish bonds" for years.
Bitcoin as a bond replacement via options (Macro Voices trading desk). On Macro Voices (August 20), Patrick Masil expressed Darius Dale's fiscal-dominance thesis through the iShares Bitcoin ETF (IBIT, ~$39), buying a deep in-the-money January 2027 $32 call at $8.75 as a capital-efficient "stock replacement."

Commentators (a stated view):

Gold, silver and Bitcoin as the scarcity trade; replace your bonds (Jordi Visser). On The Pomp Podcast, Visser argues Bitcoin is "the purest AI trade" and belongs in the growth bucket in place of bonds.
Dollar down 20%, own gold/silver/energy/ag (Hedgeye "Protect the Pile"). On Hedgeye Podcasts (August 21), the view is a 20% dollar decline over 3–8 years, with gold beating the S&P over a 3–5-year horizon.
Take profits in gold miners ahead of the September Fed meeting (Chris Temple). On The KE Report, Temple is bullish long-term but wants to bank some of the ~40% miner rally before the September 16 meeting, which "could reverse the rally if rates are raised."

Read-throughs

The inflation rewrite is the Fed's get-out-of-jail card. The BEA change on Marketplace lands exactly when the Fed needs a reason not to hike. It dovetails with McCormick's plea on Bloomberg Surveillance that markets stop obsessing over inflation "to this decimal point" and look instead at the structural drivers, "industrialization, electrification, fiscal dominance, energy policy", which "are all inflationary." A lower headline plus a chairman who de-emphasizes the headline is a recipe to sit still.
AI capex is both the economy's engine and its distortion. It's holding up GDP, roughly "0.6 to 0.9 percentage points" a quarter, "the most since the '90s," per Geopolitical Cousins (August 22), while Rosenberg says it's "sucking resources out of the old economy." And on Excess Returns (August 22), Liz Ann Sonders noted a twist: because so much of the ~$1 trillion AI buildout is spent on imports, it can actually depress the headline GDP number even as it drives investment.
Corporate credit is now hostage to the long end. The same AI borrowing that helps Kay Herr earn extra yield is, per Forward Guidance, exactly why the government is so keen to hold long yields down: "the AI buildout is now being funded... by debt issuance," and "the corporate bond market is anchored to the long end."
The labor market is the missing witness. There was no fresh jobs report or immigration-data debate in this week's podcasts, the news cycle was all bonds and Jackson Hole. What surfaced was the quiet erosion beneath the surface: Rosenberg's "downward revisions... month in and month out," Darius Dale's "500,000 to a million jobs" a year lost to revisions, and U.S. Manufacturing Today (August 18) flagging payrolls revised down by over a million jobs across 21 of the last 30 months. The August payrolls print, still to come, is the real test of whether the "resilient economy" story survives contact with the data.

What changed

Friday's recap ("The Treasury Blinked to Stop the Bond Selloff") ended with the market split on whether the buyback was a smart signal or quiet panic, and everyone waiting on Jackson Hole. Four days later:

The market rendered its verdict, buy hard assets. Friday's open question was how markets would read the intervention. This week they answered by sending Bitcoin to its biggest week on record (~23%), gold up ~14% on the month, silver toward $71 and the gold miners up ~40%, with the dollar weak. The debasement side won the trade.
The professionals are now openly skeptical the buyback even works. Friday's frame was "the Treasury can override the bond market." This week BMO ("an extra $14 billion... not sufficient") and JPMorgan's FX desk ("tactically small") put numbers on why it can't, and the long bond gave back most of its post-announcement rally.
A new wrinkle appeared: the inflation formula is changing. This wasn't in Friday's picture at all. The BEA's PCE method change, worth roughly 0.1 to 0.3 points lower, with the final "old-formula" reading due next week, is a fresh variable heading into Jackson Hole.
The stall-speed case got sharper. Friday leaned on Marc Chandler's "soft spot." This week Rosenberg supplied the mechanism and the numbers, sub-1.5% growth for three-plus quarters, ex-AI/energy profits under 5%, the savings rate halved, and the harder conclusion that the next Fed move is a cut.
Jackson Hole is now imminent, not "next week." Friday, Warsh's debut was a week out. Now it's the end of this week, and every desk is positioned around it. What he'll actually say is still unknown, no podcast this week claimed to know, but the whole week's trading was a bet that the government wants easier conditions, not tighter.