Sergio Reals 🌻 🇺🇦

The Bond Market Is Forcing Washington To Choose The U.S. bond market is not selling off because investors forgot about AI or overreacted to Iran. It is selling off because fiscal dominance is colliding with an energy driven inflation shock. That is the message behind the 30 year moving back above 5% and the 10 year pushing toward 4.50%. The long end is demanding more compensation for inflation risk, Treasury supply, fiscal stress, and policy uncertainty. The Spark Is Oil The immediate trigger is the Iran and Strait of Hormuz crisis. Oil above $100 changes the Fed calculus. It keeps headline inflation sticky and pushes gasoline, diesel, freight, food distribution, utilities, insurance, and transportation costs higher. The April CPI report already showed the pressure. Headline CPI rose 0.6% in one month. Energy rose 3.8%. Gasoline rose 5.4%. Energy was up 17.9% over the year. This is not clean disinflation. It is a supply shock moving through the cost structure of the real economy. The Fire Is Fiscal The deeper problem is that this oil shock is hitting a country already running huge deficits and issuing massive amounts of debt. The U.S. is asking investors to absorb more Treasury supply while inflation volatility is rising and fiscal credibility is weakening. Investors are no longer willing to lock up capital for 10 to 30 years at low real yields just because Washington says everything is under control. That is the return of term premium. The Fed can control the front end. It can set the overnight rate. But it cannot force investors to buy long duration Treasuries at yields they no longer believe compensate them for inflation, deficits, and currency risk. The 30 year above 5% is the bond market saying the fiscal path is no longer free. The Fed May Need Demand Destruction This is where it gets darker. The Fed would never openly say it wants global demand destruction. But functionally, a controlled growth scare solves several problems at once. If global demand weakens, oil demand cools. Commodity pressure eases. Inflation expectations soften. Long duration Treasuries catch a bid. Mortgage rates can fall. The dollar funding system stabilizes. And the Fed gets cover to cut without looking like it is surrendering to inflation. That means the Fed may tolerate tighter financial conditions until demand destruction does part of the disinflationary work for them. Not because they want pain. Because the bond market will not give them an easy cut while oil is high, deficits are huge, and inflation is reaccelerating. The Real Economy Is Already Weakening This is dangerous because yields are not rising into a clean boom. Real wages are already being squeezed. The April Real Earnings report showed nominal hourly earnings rose 0.2%, but CPI rose 0.6%, so real average hourly earnings fell 0.5%. The paycheck got bigger. The worker got poorer. Housing is already strained. Mortgage rates near 7% freeze affordability. Credit is tightening. CRE is still rolling through refinancing stress. Small businesses are under pressure. Consumers are paying more for necessities while discretionary demand weakens underneath. That is demand destruction in its early form. Not a crash yet. A squeeze. My Take The Fed is trapped. If it cuts too soon, the bond market worries inflation and fiscal policy are not under control. If it waits too long, higher oil, higher yields, falling real wages, frozen housing, and tighter credit turn the inflation shock into recession. So the bond market is forcing Washington to choose. Lower energy pressure. Fiscal discipline. Liquidity support. Or a growth scare large enough to bring back the Treasury bid. This is not an apocalyptic bond collapse yet. But it is a serious warning shot. The danger is not just that yields rise. The danger is that yields rise while the economy is already losing its ability to carry them.

1/ If yesterday's Victory Day parade had been a true reflection of Russia's frontline army as it is now, it would have been a chaotic display of battered vehicles, motorbikes, exhausted soldiers on crutches, and donkeys. A Russian warblogger imagines how it could have been. ⬇️

Something is happening to America that is slow, systematic and deadly. Trump is killing America, and it’s deliberate. 1: Trump killed NATO partnership, our strongest defense alliance against Russia and China 2: trump’s HHS Secretary is killing our public health infrastructure, creating a more sicker and vulnerable America with communicative diseases 3: over at the pentagon trump’s frat boy Petey is firing our most qualified generals, depleting our best military hardware rapidly, in a stupid war to make our military a third world level armed forces 4: trump’s DOGE deliberately hollowed out our government from essential experts, to zap its functioning capabilities 5: trump killed USAID, and we lost our goodwill around the world and became isolated pariah 6: trump ICE became his brown shirts, killing And abusing Americans to obey 7: trump’s weirdo FBI director is charging everyone and anyone to silence Americans 8: trump National security, the skunk looking girl, is dismantling our intelligence, making America vulnerable to terrorists 9: trump’s interior secretary is dismantling our national parks 10: trump’s economic team of Bassett and lutnick is crashing the economy, creating a population of economically needy 11: trump’s Epstein files that now every country have a copy of for blackmail 12: finally and most importantly, trump And his family and his oligarch enablers are looting our treasury, and stuffing our tax dollars into their pockets. Now tell me, you don’t think trump is a foreign agent, disguised as the president of the U.S, installed to destroy the US? Could it be that fuck Putin who owns trump’s ass? Drag this enemy of America out of the White House. That foreign escort Melania too.

It is reported that travel agencies in Russia are starting to close down en masse. In the first quarter of 2026, 1,200 tourist companies were liquidated in Russia, which is 34.2% more than in the same period last year, according to Kommersant. The main reason for the decline in demand was Russians' cost-cutting and restrictions on flights to Middle Eastern countries. Of course mentioning Putin’s destruction of the economy and the war is forbidden.

Marco Rubio says the goal of the war in Iran is now to restore it "back to the way it was" before Trump started the war in Iran

In a galaxy that demands strength - America stands ready. This is the way. May the 4th be with you.

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