The Treasury quietly doubled its long-end buybacks and would really prefer you not call it yield curve control · Daily Briefing

In 30 seconds: The US Treasury doubled its long-end debt buyback program to at least $4 billion per operation, pushing 30-year yields down ~9bp, sparking debate over whether this constitutes a form of yield curve control or Operation Twist amid concerns about US fiscal sustainability. Recent data shows total US consumer debt fell last quarter, with delinquencies down, foreclosures 21% below 2019 levels, and credit card debt declining YTD, though pending home sales slipped and retailer outlooks diverged, painting a mixed but broadly resilient consumer picture. Semiconductor stocks fell sharply over two days, with the SOXX ETF down 7.7%, as investors weighed peak earnings concerns and rocky AI infrastructure financing, even as the broader equal-weight S&P 500 continued to rise. US college tuition has risen 655% over 40 years with 15 schools now exceeding $100,000 annually, while GLP-1 weight-loss drugs are projected to reach 55 million Americans by 2035 and reduce food industry revenues by up to $55 billion, reshaping major consumer sectors.

The Treasury doubled the maximum size of its longer-dated nominal coupon buybacks from $2 billion to at least $4 billion per operation, effective beginning Sept. 9. The timing was conspicuous: the announcement landed two weeks after the last quarterly refunding announcement and hours before it is slated to sell $16 billion of 20-year debt. Since the buybacks were announced, coupon auctions have not changed at all. Not everyone agrees on the label. One analyst insists it is not QE and not yield-curve control. Replacing low-cost long-term debt with higher-cost short-term bills is a real cost — nothing free here. The signal, though, seems clear: 5.3% on the 30-year yield is pain. When real GDP growth is less than real bond yields, debt sustainability becomes pressured. The buyback program does not resolve the underlying debt sustainability arithmetic when real rates sit at or above real GDP growth. It removes duration from the market without resolving the underlying debt dynamics.

Total US consumer debt stood at $18.77 trillion last quarter, but the headline number obscures what is, on balance, a surprisingly tidy balance sheet. 95.3% of that debt was paid on time, and consumer foreclosures remain 21% below 2019 levels. Bankruptcies have edged higher recently, yet they are still 33% below 2019 levels. If you are looking for a consumer credit crisis, you will have to keep looking. Credit card balances tell a similar story. Outstanding card debt sits at $1.26 trillion, down 1.1% year to date, while disposable income has risen 2.4% over the same stretch. That puts credit card debt at just 5.3% of disposable income, well below the 6.4% average from 2003 to 2019. Housing is the soft spot. Pending home sales declined in all four regions in July, falling 2.5% year over year and moving into negative territory for the first time since January. Retailers are reading the room differently. Lowe's trimmed its 2026 outlook. July import prices rose 5.9% year-over-year.

The semis $SOXX dropped 7.7% over the last two days, a sharp reversal for a sector that had rallied more than 20% from 2024-07-29 through Monday's close. Meanwhile the S&P 500 closed at 7,707.98, up 0.2109% on the day. The equal-weight S&P 500 Equal Weight $RSP was up 1.5% on the day. Semis go down, everything else goes up. The morning selling of the QQQs has been in full effect over the last few days. NVDA off-balance-sheet credit guarantees carry an annual cost of 83 basis points. When the company selling you the shovels has to guarantee the credit of the people buying them, you start to ask whether the gold rush can fund itself.

One inflates the cost of entry into the middle class; the other deflates the calories that class consumes once it gets there. Over the last 40 years, college tuition and fees in the US have risen 655%, more than three times the 204% increase in CPI over the same period. The gap is not subtle. 15 schools now charge more than $100,000 per year. Meanwhile, a different kind of disruption is working its way through the consumer economy. Eli Lilly ($LLY) has returned 1,770% over the last 10 years. On the other side of the trade, General Mills ($GIS) is down 20% and Conagra ($CAG) is down 35% over the last 10 years. You are, in other words, looking at a world where the pill that makes people eat less has generated more shareholder value than the companies that make the food.