# Dollar Rises as Treasury Yields Hit 2007 High on Fed Decision Day - The Dollar Brief - Week of September 16, 2026

> The Dollar Brief for the week of September 16, 2026 (podcasts recorded September 9 to 15, 2026): a synthesis of the week's macro and FX podcasts on why the dollar finally rose as the 10-year Treasury yield hit its highest since 2007 and yen shorts were flushed, the fear of a silent Warsh hike, the credibility-versus-competition-for-capital debate over the long end, Adam Posen on the Treasury's credible threat to the dollar, and a sober look at de-dollarization.

## The Dollar Brief

### Week of September 16, 2026: Dollar Rises as Treasury Yields Hit 2007 High on Fed Decision Day

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For weeks the story was the dollar that wouldn't rise. Then, in about 48 hours, it did, and almost nobody framed it as good news. US government borrowing costs blew out to their highest since 2007, the dollar finally caught a bid on the back of those yields, and the very crowd that had just started betting on a stronger Japanese yen got run over as the dollar snapped straight back toward 155 yen "to the pip." The Federal Reserve decides this afternoon, right into the teeth of it. This week's podcasts split hard on what it all means: a dollar quietly regaining its footing, or a dollar rising for the worst possible reason, a bond market in revolt that the Fed is being forced to chase. Let's get into it.

*(Quick plain-English glossary. The "dollar" is the US dollar; the "DXY" measures it against a basket of other rich-world currencies. To be "long" the dollar is to own it and bet it rises; "short" is the opposite bet. A "Treasury" is a loan to the US government; its interest rate is its "yield," and yields rise when bond prices fall. The "10-year" and "30-year" are the government's longer-term borrowing costs ("the long end" of the market), and they matter for mortgages, car loans and the government's own interest bill. The "FOMC" is the Fed's rate-setting committee; a "hike" raises its short-term rate, the first since summer 2023. To "anchor the long end" means to keep those longer-term yields from spiraling higher. The "BOJ" is the Bank of Japan. The "carry trade" is borrowing cheaply in a low-rate currency (for years the yen) to buy higher-yielding things elsewhere. "COFER" is the IMF's tally of what currencies central banks hold in reserve. A "buyback" is the Treasury repurchasing its own older bonds to try to push long-term rates down. "PPP," purchasing-power parity, is a rough estimate of a currency's fair value. The "term premium" is the extra yield investors demand for the risk of lending long. "Commitment of Traders," or CoT, is a weekly US report on how speculators are positioned.)*

## TL;DR

- **The setup flipped: the dollar rose and the yen-short crowd got flushed.** Saxo's John Hardy said the 10-year hit "nearly 5.04%… the highest level since 2007," and in currencies, "this big move in dollar yen lower, we saw those yen shorts essentially liquidated almost all in one go," with dollar-yen "backing up right to that key 155 level to the pip" ([Saxo Market Call](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiub5qJFjr9VvOnK79hE15UnGFZS4SWjTuf79yOcbz9rknbRdD0MBOYIW70Y3v63HlTT7hpzlnG5Wwgaf23I29uTvkg55cto7IsLl4k8suRzw-3D-3D94L3_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcdZRDqbt2q3hUd-2BxNEWguAes8RpQN3P0OjsIq-2FQQr5bBlK2UY4JabTzZZpQXiNGa1yYwXISWqUTyzRNJHrf38jptPYotmpcN9-2BKxerb1-2BeFLbg4SQLiiylxUryWhTkcJ8Q-3D-3D), Sep 15).
- **A hike is all but locked (92.5% priced), but the real fear is the message, not the move.** "It could be one and mum from Warsh," said CNBC's Steve Liesman: a hike with no guidance at all, which, as Melissa Lee put it, "would be very difficult for the markets to digest" ([Fast Money](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOi61qLxtZU9XLV2FL9UvYjwl6lA8oaYtAUsK7hraDOp2AZqcfEPDtrBfIQUITKDIQk5u59jmHyj849uGJar27MBbSnZFKYLkwvdJ9uwpSboEA-3D-3DpaRm_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcekyHSAIS5CRnvVk2qpVZOqU9MorAe34XqhICMIg-2FYMCp5unow81bxzEyG3L9AJjMrNXnaBVN0H03nGU40LLT3VGHjPCVNhUmUIAGXgZ9yV5i9hLT7GSwElJjrhWDwMEdw-3D-3D), Sep 15).
- **The hardest job this afternoon isn't the hike; it's the long end.** Brookings' Robin Brooks: the number one objective "should be to anchor the long end… He's going to have to bring his A game… this is a very dangerous meeting for the Federal Reserve" ([Power Lunch](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOit-2FS97S4vjsGeZOgSE-2FB8fdECSyLiKV0U54rGZDDzNZx2mX-2BznXOwSULcJa-2FuMVbcDHnJ0lQNFYpdZsE17IzarCMQpQZ7uX-2Fn0fCqfYWVJvQ-3D-3DkhFI_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvccbIIfCtyfIjUnSX5AUiF4NGZF6bLZcU-2F39-2B0zE0JjYLd-2BvSNZ5DcJmrEw-2Fv3h2mFohaLPfo42b-2FfXj-2BqB1guJNbt-2FhGKFgFsig0npY1vsCfKPJy8JwlCyQJOyzjoo4yqQ-3D-3D), Sep 15).
- **The contrarian read: it's not a loss of faith, it's a scramble for capital.** Jefferies' David Zervos: "This is not a credibility story… I really think this is about real rates getting pushed up temporarily as we see the competition for capital," largely from AI/hyperscaler bond issuance; he puts hike odds nearer "60, 40" than 92 ([The Exchange](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiQIMQnkFpVVlO5wGKwE4S6wY4X46klRyrjMMmHcuhAgV2WS-2FnOYCWXD0HdKQNZyAQDOJ-2Bi-2FEmNQcg1gfrliaNuZztO-2FUBuHApjMp2v-2BaqFyA-3D-3DiUR3_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcc7VKeLQp-2FOiFHX-2Fm7kKzqX8AHReC7MWdZd2gFaAAdIGqyqampAQi0vVbHWjC37NF5LTVTEgPxqstJdpNp4JRYzKP1NTrK2Sxyf0GdVJP122g9Ez2FPlixXp2c-2BF4m1CmA-3D-3D), Sep 15).
- **A rare, credible word on the dollar itself.** Peterson Institute president Adam Posen: the Treasury "can" degrade the dollar ("let's be very clear, that's what we're talking about") and "it's a credible threat… very short-sighted… it's going to backfire" ([Bloomberg Talks](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOioEbwYyHtxxIBOnGsi-2BxN-2BBq8Vq-2FHk9ybDkEBVDqz4mru9zP6ZOsHmdDteDE8sl1zkNIGPrJ6BE0wLb3kvgIfzhCYHD9IALYd6Sia-2BvzGnPg-3D-3DLg5T_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcTspoBCdFuQN-2BWO5FpJJKVoVnqJXo0uVoY2ZZaX8FayJPY-2BvnSDKj-2FrHAZ6aOcF-2F5XIt0CubWhpRbmkJXgnJfwIQm5OYe8B0UdLOjf2NKBd2cdC-2B1VG5zWIFuHnJZwbcJQ-3D-3D), Sep 9).
- **De-dollarization, told soberly.** David Stein: the dollar's share of reserves has slipped from "well over 90%" in 2000 to "the high 80s," but "there's not been a mass exodus," and a New York Fed study shows just four countries ("China, Russia, Mexico, and Morocco") did most of it ([Money For the Rest of Us](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhTASiMSdtGTbQ3t-2BIwfEmbE7rMG3mBlemiUtSscVoS9iO9b9z2VbFYtrpp7j8Qyi5eJaGVSMxIab871dEnY-2Bo7ZgMB0u-2BSzwbZQSR8ViXTZg-3D-3DZqaH_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvccR1wkXKtjh7tsVvsBGycKrQtTOcUSDN9D1UC65QdUfxu5ekULjZwaK1JYgIPERSPeKfRRZccmRmZPYwEL547KRb6cnaYezBbveFB6w-2FkPC4TwON88oqIpWidarEwt6sPw-3D-3D), Sep 9).
- **…and told vividly.** Per the ECB, gold is now "27% of the world's official reserves, up from 20% only one year earlier," while Treasuries are "22%… down from 25%," so gold's value has now passed Treasuries ([The Jay Martin Show](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOi499pqVc1kK6i4McXwyxYSHTGFcNE3Ud9t70lgr-2BzRO-2FJUroI6dNS1h2n2X7jtmFioCeVT4Gnof60r5TKk0Vro-2FOjEBtDsRsIkylhRiK5bYw-3D-3DZBhA_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcSnLe0ctH5NsO3c4o7-2BQ6sZ1XDx5ACmWp3A1xBxCtsMo-2BY0HBz66f9HFqb64zdHe-2FjSI-2BIRo-2Fi-2FdJ0Ja1z0MehZ73UszQEZ29CJdvl-2FTuS13hpGntjR-2FekUL8WZrml52HQ-3D-3D), Sep 14; a resource-focused show, so weigh the framing).
- **The yield curve is whispering slowdown, not inflation.** Eurodollar University's Jeff Snider: the 2-year/10-year gap is "down to around 32, 33 basis points," heading for "a completely flat yield curve if not reinverted," and hiking into an oil shock only adds "demand destruction" ([Eurodollar University](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhIPVwR8Xv9q9VvJzigGgivyo2QDkEGU8WVLPFmpdKjGQ2ydSXbqv-2B-2BjtlyiYoJPwKw-2B4u-2Bd2TsXLIq6jXWdd37ybeQQlSlgou0r1OvspvmnA-3D-3DbDcw_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvccu1eU7IhVuHtyvRI0AIaOvJ7yAm7NoiMPgPW9P-2FbxAf78SvVLKkKjJ1-2BQodpQ4Z-2FBrRy76rHFwArAG1RMDIr8JK6R7gvw5bH2A79cMTiyzjX8cA4jGP7NsSAMe92NyfQw-3D-3D), Sep 13).
- **The yen trade of the week isn't against the dollar.** Global macro strategist Vincent Deluard: short the euro against the yen, because as Japan's savings come home "you really have to take it from Europe" ([Maggie Lake Talking Markets](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiXyVu6T48jXfHT6QrKCAGjwlz-2BIrnx6eq9SOg91VGlR8HDHR-2FPo9UIm2aPzrCaSWomYkmyQfA-2BCh2RaSuKzo7UIU1HSP7BV9nAHA-2FO6MdUVg-3D-3DrIhI_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcdGcIQHtTDzarl3yt6txST4uGOs32neORkAtE-2BosFfRBkCgHnHo1BT4pTSdNurZ1cPxNss-2B0vcnQleq2zLEXeZbEXkvydNJ1zQxm6jNubK5-2Fyrj0yDuyrQp0Y8Qnfm58yw-3D-3D), Sep 14).
- **The fiscal weight underneath it all keeps growing.** Former Assistant Treasury Secretary Ben Harris: the deficit is 6% of GDP today heading toward a projected "9%," and debt is "100%" of GDP heading to "120, 125," and the single biggest risk in his AI models is, "mathematically… the interest rate" ([Moody's Inside Economics](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOgKg1EGYJcAO6m6b-2Fn2RDQD0ZQRG5xMXpmhTJSuGHBWD7g4V7hLI8Y42dmSkYVy9jd5nfonNDGnu-2FeqrctdjnTft4phkMT5JDXhpd4YBWs0GQ-3D-3DnfVR_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcUxjgDu9hZ52nssZpQBSVMhlcIXWosa2rrAbnD-2FmmEGsueJucjVUIx0gwGfbhhL5pjbppuhJDGUD-2FcUUoWAJVQOnFmppPdAGVbA287O7bElXJR-2BV7bOEC59zkLT411G-2B3w-3D-3D), Sep 15).

## What's New

### The dog finally barked, backwards

For weeks the puzzle was a dollar that refused to rise on good news. This week it rose, but the reason should give the bulls pause, because it rose alongside a bond market coming apart.

The clearest play-by-play came from Saxo Bank's John Hardy on the [Saxo Market Call](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiub5qJFjr9VvOnK79hE15UnGFZS4SWjTuf79yOcbz9rknbRdD0MBOYIW70Y3v63HlTT7hpzlnG5Wwgaf23I29uTvkg55cto7IsLl4k8suRzw-3D-3D4kAP_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcWINR-2BjGm-2F6Vls4O7nTJj9YCJlq2KBl5542qj2lBkQeqE1q5RCeNA0NCNSiaDF4gwOzWJ6v10Q-2FZjmUWaYk-2BupPX3it-2F4-2B0EILyPbgRKJh2rL7T7tJa1OkB8MKILsJnK8Q-3D-3D) (Sep 15), who wasn't hiding how unsettling it felt: "At times, I was almost feeling physically scared. This is kind of, you know, when you're used to looking at markets over the long period and you get these multi-sigma moves over the space of a couple of days." The headline number: the 10-year Treasury yield "crossing above" the old 2023 high and trading "at nearly 5.04%. It's the highest level since 2007." It wasn't only America: Japan's 10-year hit "3.04%… a new high since… 1996," and the gap between German and French 10-year yields "blew out to as much as 98 basis points… a full 10 basis points above the prior high" of the 2010-2012 eurozone crisis.

Here's the part that matters for this newsletter. As Hardy put it, "when bond yields rise as much as they've been doing, the dollar strengthens as well in the last couple of days. We literally have a perfect storm." And that firmer dollar ran straight over the crowd that had, only last week, started betting the yen had bottomed: "this big move in dollar yen lower, we saw those yen shorts essentially liquidated almost all in one go. And we've seen dollar yen backfilling with this big new spike in yields… dollar yen backing up right to that key 155 level to the pip." In plain terms: the tidy "the yen has topped, the dollar is leaking" story from a week ago just took a hard counter-punch. This morning the dollar isn't leaking; it's rising. But it's rising with the bond market, not because the world suddenly fell back in love with it.

You can see what's driving the yields underneath it in the oil market, which is quietly seizing the whole narrative. On [Squawk on the Street](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOj6eJtJf04FLdh2Evvnq-2FnBudpbsELP0ef3EmOSLrZjFbjY28wiBdimGo-2BSpEJPp-2FH7KjIJ0-2F00tcthHoBjwwyXBuPoQUVff5X7rbGHZxDJLA-3D-3DwH7z_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcRkwjDPvBkajUhNxg5cmOTGJKkDATFNgA-2FfV5ufuKDEIQsqxhdxrLPmpt9K8xiOgflsCjoraaTmNB3z7ldGl6SzrtQWvOHWUiDfi3BZqISSB73oL5IqeRcrYMoMkbYnbTA-3D-3D) (Sep 15), with the 10-year at fresh 2007 highs and WTI crude breaching $106, the hosts flagged Costco now limiting Kirkland motor oil to "only two per customer per week" and mused that "oil is not only the new gold, but it supplants gold." When a supply shock in energy is setting the price of money, there's a limit to what a central bank meeting can do about it, a point that hangs over everything below.

### The Fed decides this afternoon, and the fear is the silence, not the hike

The market has essentially made the decision for the Fed. The CME FedWatch tool put the odds of a quarter-point hike at "92.5%" ([Power Lunch](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOit-2FS97S4vjsGeZOgSE-2FB8fdECSyLiKV0U54rGZDDzNZx2mX-2BznXOwSULcJa-2FuMVbcDHnJ0lQNFYpdZsE17IzarCMQpQZ7uX-2Fn0fCqfYWVJvQ-3D-3D7OLP_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcVTQ-2FMy8kox1VkvqmT1Ob48dlHlyKBSIbZInfxoGlIHArdhhJ4aTBjiZWOaNpOOSDBwQJX2oTwqD8W6Lle00mM9tbbfrxo7BP6fIOLLkJAbMi6ECrVHitFMrenqYhnJSDg-3D-3D), Sep 15). CNBC's own Fed survey, revealed by Steve Liesman on [Fast Money](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOi61qLxtZU9XLV2FL9UvYjwl6lA8oaYtAUsK7hraDOp2AZqcfEPDtrBfIQUITKDIQk5u59jmHyj849uGJar27MBbSnZFKYLkwvdJ9uwpSboEA-3D-3DREK9_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvceQkbEch7SLj9lA3RJ0IZNIv8pwcOcCEAoCmKbykoDD7ukU4uV-2F-2Bq7-2B0ffCNTkXbx9ecShfly5dgLiOGvXkmmOyRqpdtj0SjMffx6LL7L75i64g1nBjnGRaV2TcRGOiDrg-3D-3D) (Sep 15), showed "76% see a hike at this meeting," "55%… seeing more than one hike this year," and "86% look for a hike this year. That's more than double what it was last month." The inflation outlook has jumped too: "the average around three and a half for 2026," versus "2.7 before the Iran war." The two-year yield sat at "466… now 467," a full "100 basis points above Fed funds," the market's way of shouting that more hikes are coming.

So the drama isn't whether the Fed hikes; it's whether new Chair Kevin Warsh, who has made a point of saying less, explains himself at all. Liesman's phrase for it: "It could be one and mum from Warsh." Melissa Lee's response captured the worry: "that would be very difficult for the markets to digest." A hike with no guidance, into a bond market already testing 5%, is a communication tightrope.

On [Power Lunch](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOit-2FS97S4vjsGeZOgSE-2FB8fdECSyLiKV0U54rGZDDzNZx2mX-2BznXOwSULcJa-2FuMVbcDHnJ0lQNFYpdZsE17IzarCMQpQZ7uX-2Fn0fCqfYWVJvQ-3D-3Dijeq_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcbHayqd0J8yPo8nu-2BrSoWo7W0EAy-2B0HPy6pAa1OyXECGNtAS9aHSzMdnshRPkIkHAWVLwDi8cf-2FIT8-2Fjn5yg1TwyKgco-2Bgjy4mU1Z9uuwC9wdJvohaspAzb7tntVyVpdSA-3D-3D) (Sep 15), Evercore ISI's Julian Emanuel argued the hike is the safer path precisely because of the long end: not hiking, he said, means "you really risk a massive de-anchoring in the 10-year yield. And to us, that is likely the most damaging outcome." He framed it as a regime change: "the almost four hikes to the end of next year might be slightly lower. But it is a new paradigm. And the fact that the market actually wants a hike… tells you you're in a new place."

Brookings' Robin Brooks went further on the danger. He recalled July, when a dovish-sounding Warsh let the long end run: "Kevin Walsh came off dovish. And of course, what happened after was that the yield curve steepened very sharply." This time, "the number one objective for tomorrow, for Kevin Walsh and for the U.S. government in general, should be to anchor the long end." The problem is the market has priced a hike today, another in December, and two more next year: "is Walsh going to be able to validate that market pricing? I highly doubt it. So this is a very dangerous meeting for the Federal Reserve. He's going to have to bring his A game in terms of communication." His diagnosis of the underlying trouble was blunt: "We don't have an inflation problem as yet. We have a debt problem and a fiscal policy problem. And ideally, that would not be for monetary policy to fix."

Not everyone thinks 5% is a crisis. CNBC's Rick Santelli pushed back hard on the same show: "I don't see anything demanding. I don't see any hair on fire in the market." To him, "5%… it's normalization. Okay? There were times when I was a bit younger where we were significantly higher than 5%. The moral of the story is we have a whole generation on Wall Street that has never lived through a bear market in yields." A weak 20-year auction spooked people, he allowed, but "last week's 10- and 30-year auction were fantastic," and he expects a 5-handle to "turn… into buyers."

### The smartest disagreement of the week: a credibility crisis, or just a scramble for capital?

This is where the podcasts genuinely split, and it's the argument that decides whether the dollar's softness is structural or passing.

David Zervos of Jefferies made the benign case on [The Exchange](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiQIMQnkFpVVlO5wGKwE4S6wY4X46klRyrjMMmHcuhAgV2WS-2FnOYCWXD0HdKQNZyAQDOJ-2Bi-2FEmNQcg1gfrliaNuZztO-2FUBuHApjMp2v-2BaqFyA-3D-3DYL-O_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcROMMVck7b3MGmP88S3LGveYkEi2HqoeuLFEdAU0INH-2FuWw89tJhY0ZVc5yzZW6h2R-2BT2tH4TjMq8m2hC6MNA0SlyJdS9WukaECqMz9QSXNd3rXgBOjPBD9V0fq8hd-2B78Q-3D-3D) (Sep 15), and it's worth taking seriously. Rising long-term yields, he argued, are not a verdict on America: "This is not a credibility story. It's not really about long term debts and deficits… I really think this is about real rates getting pushed up temporarily as we see the competition for capital, particularly at the long end." The competition he means is the AI build-out: hyperscalers and their suppliers are "double A and single A issuers that are basically coming to market and trading like like double B's effectively. But people still want their debt." In his telling, that's "a sort of strength story," and he expects Treasury buybacks to "minimize some of that." He also thinks the market is too sure of the hike, pegging the real odds "much closer to a 60, 40 or 65, 35," and reads Warsh's silence as internal politics: a committee "really hell bent on this" that the chair has decided to join rather than fight.

The other side says the market always wins these arguments, and the erosion is real. Alberto Gallo of the hedge fund Andromeda (an investor with money on the line, not a commentator) laid it out on [The Credit Edge](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhRpm9Va8Tu5fRO-2BredxKhzeT5VYcf-2FSSvp8-2BPMig446LwxERfg8yOniPTOzALW9Z3RMwFPX4kwgRNq0BlWaBjAFJLxObhrhInSs73KhGeJtA-3D-3DyALs_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcRbj7G-2F7F45-2FREqWKDPJ-2FGzgN4pdHYyRO8sJdw-2FNpO3egFrhiuB1TI0q992xzKWDk9mNn-2FUU9QuXUjAW4YGRVEXOmIH-2BmR8tQZNC5ANxoQYsGxSScKDFfMuzwLRi-2FSzYOw-3D-3D) (Sep 10): "there is a slow erosion of credibility as the dollar obviously has come down in percentage of global reserves. There is a lack of alternative. But unfortunately… the path is set and Western governments have not been able to reverse it. And if anything, the Iran war might have accelerated this loss of credibility." He reached for the late Roman Empire, "shaving silver from their coins to pay more soldiers," to describe governments too indebted to choose between the currency and the country. His base case: central banks "will still be leaning dovish. So they'll hike, but they'll hike less than needed" (one from the Fed, one from the BOJ), leaving bond investors in "an environment of financial repression" where a 4.8% Treasury doesn't actually beat real-world inflation, so "you need returns that are linked to real assets, not only paper assets." And on the fiscal root of it: "The U.S. government never had a 7% deficit with unemployment… below 4%. This is a pro-cyclical switch."

### A rare, credible word on the dollar itself

Most weeks the dollar's own softness gets discussed only sideways. This week Adam Posen, president of the Peterson Institute for International Economics and a former Bank of England policymaker, addressed it head-on on [Bloomberg Talks](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOioEbwYyHtxxIBOnGsi-2BxN-2BBq8Vq-2FHk9ybDkEBVDqz4mru9zP6ZOsHmdDteDE8sl1zkNIGPrJ6BE0wLb3kvgIfzhCYHD9IALYd6Sia-2BvzGnPg-3D-3D7Dco_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcW-2B57xu0tKveJLgqwAs-2F3GzMQuNkFriZU2igURmBP2qqvfKrH9A6j64JQ9saWnm02CMt-2FMQ81V-2FQMg73Ojl5P3LLkIHwJ-2BFKOmviQwCUaIJ2CeoQisTGlWY3cZIlqXf4wQ-3D-3D) (Sep 9), and he's about as far from talking his own book as a guest gets.

On the Treasury's posturing about selling dollars to prop up the yen: "if he chooses to degrade the dollar, and let's be very clear, that's what we're talking about, he can do so… It's always easy for a finance minister or Treasury secretary to weaken a currency. So it's a credible threat in that sense. It's very short-sighted because weakening the dollar isn't going to help anything. But it's a credible threat." Why do it at all? Posen guessed at "some weird combination of the president wants something and the cabinet snaps to attention," plus positioning "ahead of the Xi Trump summit." And he dismantled the mercantilist logic (that an overvalued dollar hollows out US manufacturing) as "either exaggerated… Or it's mistaken because on net, the virtues of having lower inflation and lower capital costs for the economy as a whole and a lower interest bill for the U.S. government outweigh these issues." (On oil, for what it's worth, Posen is relaxed: "I actually don't think it's that big a deal… we're past the peak of oil impact on the major economies.") It is the clearest statement of the week that part of the dollar's weakness is a choice, not an accident.

### De-dollarization gets its most grown-up airing in weeks

Last week this theme was mostly gold cheerleaders. This week it got real sourcing, from two very different directions.

The sober version came from David Stein on [Money For the Rest of Us](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhTASiMSdtGTbQ3t-2BIwfEmbE7rMG3mBlemiUtSscVoS9iO9b9z2VbFYtrpp7j8Qyi5eJaGVSMxIab871dEnY-2Bo7ZgMB0u-2BSzwbZQSR8ViXTZg-3D-3DE4WP_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcZLYghY4onXLaOCTOqDV33gWQvO9YdjCzFD3qUplxaaMjLFnJ5DYrdFQsYQ1Xhq3p1FCsUbESe-2BvbtpWKFei75MDFXY4sFuROdPLrP8tvcoPDDCePAgeekdi-2F8q91RC6YA-3D-3D) (Sep 9). Central banks have been buying "over 1,000 tons of gold a year," up from "400 to 600 tons" in 2014-2021. But the dollar itself is not being dumped: its share of reserves went from "well over 90%" in 2000 to "the high 80s" now, and "there's not been a mass exodus." He leaned on a recent New York Fed study: over rolling four-year windows, "the number of central banks increasing the share of the dollar versus those that are decreasing… are about the same." The reduction is concentrated: "it's primarily four countries that have reduced their dollar reserves… China, Russia, Mexico, and Morocco," and "those four central banks own as much gold as all the other central banks around the world." Most of the real move traces to Russia being cut off from the financial system after 2022, which, he noted, is also why gold's usual link to real interest rates "broke down."

The vivid version came from [The Jay Martin Show](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOi499pqVc1kK6i4McXwyxYSHTGFcNE3Ud9t70lgr-2BzRO-2FJUroI6dNS1h2n2X7jtmFioCeVT4Gnof60r5TKk0Vro-2FOjEBtDsRsIkylhRiK5bYw-3D-3DyHIv_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcZ0yX6a-2BjX3GH5pm3ZsK1CY0tKLFUWTVAmG017-2BE-2BWReCOEdpTwaNKckWJwghvnokxKgNZbGyURw8bRiLtOd4DznvGq3OCq5X3k-2B70NxIR-2BGoGKS6aKx1Pi6YJKh-2F7L4Wg-3D-3D) (Sep 14), a resource-focused show, so weigh the enthusiasm, but the numbers and reasoning were careful. Citing the European Central Bank, gold made up "27% of the world's official reserves" at the end of 2025, "up from 20% only one year earlier," while American Treasuries were "22%… down from 25%," meaning "the value of the gold sitting in the world's reserves has now passed the value of American treasuries." Governments now hold "more than 36,000 tons of gold, a level not seen since the 1940s." The show's sharper point was about control, not ownership: the New York Fed's vault "held over 12,000 tons of gold in the mid-1970s" and "around 6,331 tons today." This year France took its New York holdings "to zero" and the Netherlands "cut its share from 31% of its gold down to 18," mostly by selling old bars in New York and buying new ones at home, a method that conveniently "does not require anybody to audit the vault." The trigger was the 2022 freeze of "roughly $300 billion of Russia's reserves," which showed every reserve manager "which parts of their emergency savings were genuinely theirs." The honest takeaway the host himself offered: read "the rate of change," not the snapshot. "The snapshot tells you where you are. The trend tells you where you are going."

Put the two together and you get the same picture from opposite temperaments: the level still says the dollar is dominant; the trend says reserve managers are quietly diversifying at the margin. Erosion, not exodus.

### The yen and the BOJ (Friday): the trade isn't against the dollar

This week's flush (yen shorts wiped out, dollar-yen back to 155, per Saxo above) is the near-term counterpoint to last week's "the yen has topped" chorus. But the structural case for a stronger yen held up in the podcasts. Vincent Deluard, on [Maggie Lake Talking Markets](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiXyVu6T48jXfHT6QrKCAGjwlz-2BIrnx6eq9SOg91VGlR8HDHR-2FPo9UIm2aPzrCaSWomYkmyQfA-2BCh2RaSuKzo7UIU1HSP7BV9nAHA-2FO6MdUVg-3D-3DXTBz_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcbLLVSQOhgk5qfSafom0v8nrAYCZkHetfvrAw80kCyYvxMU6XPxVxjVoWyldRjwhv63HntLFsaX9NCamSF7v7-2FMbvup568dpH6QfPCJczzkGkhx-2BRyWRwU4tdiwCG6XfhA-3D-3D) (Sep 14), reminded listeners how far it's fallen: since the 2011 earthquake "the yen has lost more than 50%," and even at 155 "it's still pretty cheap." His contrarian twist is that the fiscal fears usually pinned on Japan belong elsewhere: "In which country is R greater than G? … Who has a problem with fiscal dominance? Is it Japan or is it Europe? … Japan actually has a primary, small primary surplus." So his trade isn't the obvious short dollar-yen; it's short the euro against the yen: "if you're Japanese and you want to reallocate 10% of your savings back home, you really have to take it from Europe. So that's why I see the pressure building on… Euro Yen." He pairs it with a genuine warning that the next European debt crisis (France and Germany, not the old periphery) could be "much more lethal." The BOJ decides Friday; a hike is widely expected, and the yen's next leg hinges on whether it delivers.

### The curve's quiet dissent

While the hawks focus on oil-driven inflation, Jeff Snider on [Eurodollar University](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhIPVwR8Xv9q9VvJzigGgivyo2QDkEGU8WVLPFmpdKjGQ2ydSXbqv-2B-2BjtlyiYoJPwKw-2B4u-2Bd2TsXLIq6jXWdd37ybeQQlSlgou0r1OvspvmnA-3D-3Dz2Oq_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcbfjymIwx9bQLjQyEE3srZSrvSY4YKjrSTq32zYqIrF1X-2BtK8bGMZyxXcLb3B-2BZ4z1uvBc6EW3Dts9juExPKIdxBIsd2e02wgzcCRc0w40mTePMneWaeQv-2B-2BoDxzT5Ocmw-3D-3D) (Sep 13) argued the bond market is telling the opposite story. The short end is pricing the hike (the two-year "in the 460 range"), but the 2-year/10-year spread is "down to around 32, 33 basis points" and flattening toward "a completely flat yield curve if not reinverted." (An inverted curve, where short rates top long rates, has historically preceded recessions.) His read on the data: core CPI ran "2.4%" year-over-year in August, "the lowest of the cycle," with "no evidence of second round effects" from energy, because demand is already weakening. He pointed to the IEA now forecasting global oil demand to "decline by 2.5 million barrels per day in 2026," nearly a million more than a month earlier, and to US gasoline volumes falling even as dollar sales rise (Circle K's gasoline sales were up "33%… by price," but volumes "fell by almost 2%"). His conclusion, "there is only one way for this to end," in demand destruction, is a house view worth flagging (Snider has long leaned structurally deflationary). But the implication for the dollar is real: if the Fed is hiking into a slowdown, the "higher rates, stronger currency" reflex may be on a short clock.

### The fiscal weight behind all of it

The long-end trouble sits on a deteriorating fiscal base, laid out plainly by Ben Harris (former Assistant Treasury Secretary and chief economist under Janet Yellen) on [Moody's Inside Economics](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOgKg1EGYJcAO6m6b-2Fn2RDQD0ZQRG5xMXpmhTJSuGHBWD7g4V7hLI8Y42dmSkYVy9jd5nfonNDGnu-2FeqrctdjnTft4phkMT5JDXhpd4YBWs0GQ-3D-3DEjzz_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvceVih0QQEkxk5Mjb5WLoCZrSNwslVoPP5RLEgscnb2S1rPdHVg-2BvQpBrhYZLw5uvp5DtiNI4LCRtPdfVh2UKMwx10a1aV6yryK5fQDIx7zLKhspJex23wfZXFqHL57vNeA-3D-3D) (Sep 15). The deficit is "6%" of GDP now, heading to a projected "9%" over a decade; the primary deficit (before interest) is "3%"; debt is "100%" of GDP, on track to "120, 125." He can't remember "a time when all three of those measures are kind of screaming the same thing." Even generous AI-productivity assumptions barely rescue it, and when his team ranked the risks, the biggest was blunt: "Mathematically, it's the interest rate. It's a 35% increase in the yield curve across the curve. And that's just because our stock of debt is so dang high right now." On the Treasury's response, he was cool: Bessent's move to double buybacks "surprised markets. I thought it was not a good sign."

Hanging over the bond market is the pre-election politics: the proposed $5,000 "dividend" to voters, which last week's podcasts costed near $1.3 trillion. The fresh angle this week came, of all places, from the Bitcoin corner: Jack Mallers (the Strike CEO is an avowed Bitcoiner, so discount the theatrics) relayed a sharp point from Luke Gromen on [The Jack Mallers Show](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhoyGhbaPyRnDha1vuOv7HcPfN93hogCAxNl9HKZo8DYfV4w6S-2BasqUn4M29YfYFEv1eh1r3v-2BYuEf0irMO1PbdYcLyGbiNYUabhRWWsxcYRQ-3D-3DdrPo_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcTAXQVVQzmyXFTS0YsEpn-2BPe2e44kHEpwfg-2FUkMVQ-2FPqYri251y0T18RLlNQ6ODltY0MRrHHBaKa835pYVRLIyorqPMvJXY9jZOX1Z1DPmIVv7pcWpmhpUXju1NSEOJ8dw-3D-3D) (Sep 15): if a $5,000 handout is inflationary, so is the government "increasing its deficit to hand out higher interest outlays on $40 trillion in debt on a $31 trillion economy as a result of the Fed rate hikes." In other words, hiking is not obviously the disinflationary move it looks like when the debt is this large. Mallers' other flourishes are worth knowing even if you dock the drama: China's official Treasury holdings are "back to the same levels it was in 2001," Japan "sold almost $90 billion of Treasuries to fund the intervention" in the yen, and by his math this is "the worst 10-year annualized U.S. bond return ever… since 1793."

## The Debate

*Where the podcasts genuinely disagreed this week.*

**Is the dollar's new firmness a bottom, or a bond-market accident?** *A live split, and it's the whole ballgame.* The dollar rose this week for the first time in a while, but it rose with a bond market in revolt and by flushing out yen shorts (Saxo, Sep 15), not on any renewed love for America. The crowding-topping camp from last week isn't refuted; it just got a violent counter-move. The tell that settles it: whether the dollar can hold this bid after this afternoon's decision, or fades once the hike is in hand.

**Credibility crisis or competition for capital?** *The sharpest disagreement of the week.* Zervos says the long-end sell-off is a strength story, AI issuers competing for capital rather than the world losing faith ([The Exchange](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiQIMQnkFpVVlO5wGKwE4S6wY4X46klRyrjMMmHcuhAgV2WS-2FnOYCWXD0HdKQNZyAQDOJ-2Bi-2FEmNQcg1gfrliaNuZztO-2FUBuHApjMp2v-2BaqFyA-3D-3DPDZ9_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcQyuF9vo3f5TOg-2F2liyz1NMf2PrMBDeDci0eDrZ6pcvadYAFX75JOA623cxrk20wQl2mSQxz16WP4Y5f6osMy22-2BBTenrC0THwuf0ReGBcbKFiE8aQQ1c1cep7cfc1B-2FmA-3D-3D), Sep 15). Brooks and Gallo say it's a debt-and-credibility story that monetary policy can't fix ([Power Lunch](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOit-2FS97S4vjsGeZOgSE-2FB8fdECSyLiKV0U54rGZDDzNZx2mX-2BznXOwSULcJa-2FuMVbcDHnJ0lQNFYpdZsE17IzarCMQpQZ7uX-2Fn0fCqfYWVJvQ-3D-3DO59G_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcYRyz1eS-2BJ8Oxqyhdm4uFISDY4gsb8VpxT3IRym6QeH23U0GbDQOXIMTlMazut3raTKftm-2BUPV7DnfH64N4KrwgUvw9Oo98ST8-2FMahqZJpw-2FkDBrOurJZG-2FkZkI-2F2M0xuQ-3D-3D), Sep 15; [The Credit Edge](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhRpm9Va8Tu5fRO-2BredxKhzeT5VYcf-2FSSvp8-2BPMig446LwxERfg8yOniPTOzALW9Z3RMwFPX4kwgRNq0BlWaBjAFJLxObhrhInSs73KhGeJtA-3D-3DjDO5_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcZIKwF142tthnSnhvvt-2FTosW7SbFvX6ThIwRJQ-2FepbLYmpSlS8dWL5ulhYkaMeJZKUhqE51JphH3BJinhdaBis-2Bi9WswpHF8AEOP3yWkL59gglbGP79FDOyhIxRBlZivfw-3D-3D), Sep 10). The referee: whether the long end calms once the hike lands. Zervos is "optimistic"; Brooks calls it "a very dangerous meeting."

**Does a hike even help the dollar?** *Genuinely unresolved.* Emanuel says not hiking risks "a massive de-anchoring" of the 10-year, so the hike defends the dollar's foundation ([Power Lunch](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOit-2FS97S4vjsGeZOgSE-2FB8fdECSyLiKV0U54rGZDDzNZx2mX-2BznXOwSULcJa-2FuMVbcDHnJ0lQNFYpdZsE17IzarCMQpQZ7uX-2Fn0fCqfYWVJvQ-3D-3Dccn6_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcRAcrLKxqhti4I4MtaC0q2Y1Qqqa7sUn6WskdgFT-2FJf7Ak-2Fc1ycRaDBYOKrJm9BDhB7W7hnox60N8ScFwEgdJw-2BDpV-2FkT3PqIuZd2PITf1Hzon0u7Sg-2BYFicpkHE8gT-2BxQ-3D-3D), Sep 15). Snider says hiking into demand destruction just flattens the curve and shortens the dollar's rate support ([Eurodollar University](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhIPVwR8Xv9q9VvJzigGgivyo2QDkEGU8WVLPFmpdKjGQ2ydSXbqv-2B-2BjtlyiYoJPwKw-2B4u-2Bd2TsXLIq6jXWdd37ybeQQlSlgou0r1OvspvmnA-3D-3DSXLY_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcTdZRP89Cof-2BRA9UAYWxxHON0RNx98-2ByQF-2FVcC9axQ38eyuEKkNoexi6jMFGNrlbbsAq4yik1-2BoWw6kVDYiNEvjim3E-2By4rrKUoPbUy3MVT9GJgCXRd9I2YDfys6ePnYIA-3D-3D), Sep 13). And veteran strategist Liz Ann Sonders would not hike at all: "there is more risk in hiking rates now than there is risk in just staying put" ([The Investopedia Express](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOg3nroEeary-2F41wHHVThmnRygk6CodXU-2F9yer-2BT8QYs2eD4RGJDPmSZzgGL-2BOC3Y2Osz3zON1usvQbksThs5eyPjSR1TbA7qUoGy35SmjFAew-3D-3DVGG1_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcQgqIhVZSo2zfUqLXqq-2F33a-2FDkR77F-2FehyPqDN9kagA7N2hzi7IWxXNfg2fmjLLExawA-2B-2Fx32ghyvD-2FG22hpIR21kXKvElYg96QuvAqZg1k40pw0BaT3-2BOUF9uFQO9mx3w-3D-3D), Sep 14).

**Has the yen topped?** *This week says "not yet"; the structural case says "eventually, down."* The flush snapped dollar-yen back to 155 (Saxo, Sep 15). But Deluard's fundamental case (cheap yen, Japanese savings coming home, a primary surplus) is intact, and his cleaner expression of it is short euro-yen, not short dollar-yen ([Maggie Lake](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiXyVu6T48jXfHT6QrKCAGjwlz-2BIrnx6eq9SOg91VGlR8HDHR-2FPo9UIm2aPzrCaSWomYkmyQfA-2BCh2RaSuKzo7UIU1HSP7BV9nAHA-2FO6MdUVg-3D-3D-KEI_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcbe76TkodM5I934Y-2FgZp8pXHUf5qRfmwgQ3H-2BBt-2BhfGNSFIA-2FAXvYzTd8tpq19iA1ozSy0-2Bbrql-2BNChiZOcJiJhoXm5uW6LlASAhGURn-2FaQWOfSiTajcQatlL9fcLTTBGw-3D-3D), Sep 14). The BOJ on Friday is the swing factor.

## The Trades in Play

*These are speakers' own stated positions and views, not advice.*

- **Short the euro against the yen.** Vincent Deluard's highest-conviction expression of the yen view: Japanese repatriation has to come out of Europe, and Europe is where the next debt crisis brews ([Maggie Lake](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiXyVu6T48jXfHT6QrKCAGjwlz-2BIrnx6eq9SOg91VGlR8HDHR-2FPo9UIm2aPzrCaSWomYkmyQfA-2BCh2RaSuKzo7UIU1HSP7BV9nAHA-2FO6MdUVg-3D-3DSE4P_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcfMh-2BM3tlfEE-2BBjYlS-2Fwxyhm9KQa7zhvL0YJxGgShiyCQmycdGtoMlr6gcZMG8a7Uniwc-2BNyLJekXQ2ayRVqsKWdPXzly96eDSwN9lnW-2BINjD30sdcNwkCQYHfJ-2FwfxuKQ-3D-3D), Sep 14).
- **Own real assets over "paper."** Andromeda's Alberto Gallo (an operator, not a pundit): financial repression means a nominally fat Treasury yield is a thin real one, so tilt to assets "linked to real assets, not only paper" ([The Credit Edge](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhRpm9Va8Tu5fRO-2BredxKhzeT5VYcf-2FSSvp8-2BPMig446LwxERfg8yOniPTOzALW9Z3RMwFPX4kwgRNq0BlWaBjAFJLxObhrhInSs73KhGeJtA-3D-3DbVgN_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcaqTv6-2BYf98NpcgPRMFJ2a7uc5ec-2BAJ4fXgmP1qZBXqi0HJ2HFjIuyDHBPgwPwjH4tEFY-2FE305FK39n7cA0vVZGy4THhxPx83HwDAklwRdPeaeRFDTrMKcn9mtyqi7gGcg-3D-3D), Sep 10).
- **Buy the long end at a 5-handle.** Rick Santelli's expectation that a 5% Treasury turns crowds into buyers rather than sellers: "they're most likely going to turn into buyers" ([Power Lunch](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOit-2FS97S4vjsGeZOgSE-2FB8fdECSyLiKV0U54rGZDDzNZx2mX-2BznXOwSULcJa-2FuMVbcDHnJ0lQNFYpdZsE17IzarCMQpQZ7uX-2Fn0fCqfYWVJvQ-3D-3D1ofU_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcQKgxjbKXMxdX83twpJbJ3WjsfVvwho0XjQIXvk6IIJO-2BEfhHhB1peyr51EoYVilsMXqjVeyLmJ1fqYG0JRcKOGi3sgswcaSeAcQ8AlPvMMw2oSg5yBLKdvKtjXVhfkmsQ-3D-3D), Sep 15).
- **Own gold and Bitcoin as debasement hedges, *from openly interested sources*.** The resource-focused [Jay Martin Show](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOi499pqVc1kK6i4McXwyxYSHTGFcNE3Ud9t70lgr-2BzRO-2FJUroI6dNS1h2n2X7jtmFioCeVT4Gnof60r5TKk0Vro-2FOjEBtDsRsIkylhRiK5bYw-3D-3D2_A6_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcRIW9onZTufk08BFwTqapqisvleUTobSuOs0L4FcItB-2Fzjfzghc1ksERbatktdjmytTTmHQa72kiX6MdXltq7eCQtuy5Oi50W3xLnhKcPfUOTVT27-2BPE0Mh5a3t2tnAY-2BA-3D-3D) (Sep 14) frames gold as the reserve trade of the decade; Bitcoiner Jack Mallers frames Bitcoin as the "exit door" ([The Jack Mallers Show](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhoyGhbaPyRnDha1vuOv7HcPfN93hogCAxNl9HKZo8DYfV4w6S-2BasqUn4M29YfYFEv1eh1r3v-2BYuEf0irMO1PbdYcLyGbiNYUabhRWWsxcYRQ-3D-3DkGkb_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbVBjLGMiicVuBQ0cOG-2FI26Oxk5GfMRHnYXFV2ZBoDSvcdAmAGG7vOxDIMdqZixKEOCJU7YP-2BRsG5pwuHdHe8NljNOT4fwt9tG6QEImQ49Yu-2FPNvpvl9e7cQh8FOfrtVJRvtX5ekveINmg4RNTs4v5XovY8VWxo0aWdfW1esQ9tGoA-3D-3D), Sep 15). Both are talking their book.

## Read-Throughs

- **The dollar's silence became a shout, in the wrong key.** It finally rose, but on a bond market in revolt, not renewed trust. Watch whether it holds the bid after this afternoon's decision: a dollar that can't keep its gains on an actual hike is still a weak dollar wearing a strong-dollar costume.
- **The long end is the whole game now.** Brooks, Zervos, Snider and Harris disagree on almost everything except this: the 10- and 30-year are driving, and Warsh's hardest task this afternoon is to anchor them. If he goes "one and mum," the long end, not the funds rate, sets the dollar's tone.
- **"Erosion, not exodus" is still the right frame.** Stein's sober numbers and Jay Martin's vivid ones describe the same thing: reserve managers diversifying at the margin, quietly, measured by rate of change. That's a slow tax on the dollar, not a run, but it's real, and it's the trend, not the snapshot, that matters.
- **Higher rates, weaker economy, one date on the calendar.** Oil above $100, a Fed hiking into a visible slowdown, a $5,000 pre-election giveaway, and the November midterms all point the same direction. Snider's flattening curve is the warning that the rate support under the dollar may not survive the winter.

## What Changed This Week

- **The dollar actually rose, and the yen shorts got flushed.** Last week's "yen topped / dollar leaking" narrative met a violent counter-move; dollar-yen snapped back to 155 as shorts were "liquidated almost all in one go."
- **Yields took out 2023 and hit a 19-year high.** The 10-year reached ~5.04%, the highest since 2007, turning the meeting into a fight to anchor the long end rather than a debate about the hike.
- **De-dollarization got credible sourcing.** It moved from gold-bug talk to a New York Fed study (via Stein) and ECB reserve data showing gold has passed Treasuries in value (via Jay Martin).
- **A serious dollar-specific voice weighed in.** Posen's "credible threat… it's going to backfire" put the self-inflicted piece of dollar weakness on the record.
- **The hawk-skeptic case sharpened.** Snider's flattening-curve, demand-destruction read and Sonders' "more risk in hiking than staying put" gave the anti-hike side real spine going into the decision.

---

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