Asia's $2 trillion surplus is going everywhere except your Treasuries and somehow that's the calm part · Daily Briefing

In 30 seconds: East Asia's combined current account surplus is on track for approximately $2 trillion this year, a record level, but unusually little of it is being recycled into US Treasuries, with equity flows and offshore deposits absorbing the imbalance instead. The Treasury's announcement of expanded long-bond buybacks briefly suppressed 30-year yields before they retraced, with gold and Bitcoin surging as markets interpreted the move as financial repression rather than genuine debt management. US national debt has surpassed $40 trillion amid growing concerns about fiscal dominance, with critics highlighting broken promises on deficit reduction and analysts warning of sustained dollar weakness and financial repression. A dispute has emerged between White House claims of controlling Strait of Hormuz oil flows and independent ship trackers showing far lower volumes, while US diesel prices approach all-time highs and Iran is seen as broadly deterring US military escalation.

The interesting part is not the size. It is where the money is going. Taiwan's current account surplus now runs at 25% of GDP, and from 2000 to 2020, bond outflows via reserves, life insurers, and banks were basically equal to the current account surplus. Taiwan's net equity outflow is $60 billion, roughly 2x its debt outflow. Equity outflows don't fully explain why Taiwan's $250 billion current account surplus hasn't pushed the Taiwan dollar higher — TSMC has also been encouraged to keep dollars offshore, and the lifers have reversed their hedges. Korea tells a parallel story. Foreign selling of Korean stocks dominated equity flows in the first half of 2026. The inflows into the US have shifted towards foreign buying of US equities.

The same Gold driving East Asia Current Account Surpluses Hit Record, Capital Flow Shifts is also a factor in Treasury Buybacks Roil Bond Market, Yields Surge.

On Wednesday, the Treasury doubled its long-bond buybacks, a move that came one day after the 30-year Treasury yield had touched 5.337%, its highest since 2007. The 10-year yield sits up near previous peaks, and the yield curve isn't even steep. The arithmetic explains why. The Treasury is running 8 buyback operations per quarter on 10- to 30-year bonds, at $6 billion per operation, for $48 billion total. That sounds large until you notice monthly issuance of 20s and 30s alone runs $39 billion per month. Buybacks absorb roughly 41% of that flow — meaningful but hardly overwhelming. Across the full 10- to 30-year issuance complex, the share drops to about 22%. Financial repression is common when debts get this high, and the long end yield is normal relative to the short end — arguably too low, even. Markets drew their own conclusions. Gold closed at $4,579.70, up 2.01% on the day. Silver jumped 3.79% to $68.22. In other words, buybacks swap duration without telling anyone anything new about the path of rates. US weekly initial jobless claims (actual) 208,000 vs US weekly initial jobless claims (expected) 210,000. A strong labor market is not the backdrop that makes long bonds easier to sell.

The same Bitcoin driving Treasury Buybacks Roil Bond Market, Yields Surge is also a factor in US Debt Hits $40 Trillion, Fiscal Dominance Fears Mount.

US national debt has surpassed $40 trillion. The US national debt first cracked $1 trillion in 1981. The debt has grown by $658 billion since July first alone. So much for that. The promises are bipartisan and ancient. The Federal Government cannot continue to spend more money than it takes in. If we sell 200,000... 200,000 of these gold green cards is $1 trillion to pay down our debt, and that's why the President is doing it, because we are going to balance the budget, and we are going to pay off the debt under President Trump. Beyond the $40 trillion headline, entitlements of $100T+ remain largely off-balance sheet, and True Interest Expense is still running above 100% of receipts. Gold up 4%. US Dollar down 1%. Bitcoin has rallied 12%.

The gap between those two estimates is not a rounding error. It is the difference between "complete control" and something considerably less complete. If you are a refiner trying to plan your crude slate, the gap between those two numbers is the gap between comfort and panic. The panic is already showing up at the pump. What makes this particularly uncomfortable is that diesel prices are reaching these levels with crude prices much lower, the crack spread doing much of the work. Meanwhile, the geopolitical backdrop offers little relief. Ship tracker estimates of Hormuz exit flow 4-6 million barrels per day vs White House estimate of Hormuz exit flow 10+ million barrels per day.