As gunboat diplomacy sails back into fashion, the U.S. Treasury quietly floated $69 billion of 2-year paper. It cleared at a 3.499% yield—1 bp higher than last month’s 3.489%—and politely tailed the when-issued by 0.3 bps, the chunkiest short-end tail since April’s 0.6 bps. Not a disaster, but a reminder that after a year of auctions stopping through, buyers are no longer saluting quite as crisply.

The bid-to-cover slipped to 2.543, down from November’s healthier 2.684 and the weakest showing since September—also below the six-auction average of 2.623. The internals didn’t help the mood: Indirects showed up late and light at 53.21% (their worst since March 2023), while Directs did more of the heavy lifting at 34.05%. The result? Dealers were left holding 12.74% of the auction—the biggest inventory hangover since June. In short, demand showed up, but enthusiasm clearly stayed home.

As the great awakening spreads that “risk-free” bonds are now anything but, the auction landed with a thud rather than a bang. Demand was polite, enthusiasm was optional, and the metrics were unmistakably soft—an early omen that in the Year of the Fire Horse, bond yields are likely to gallop higher whether investors like it or not.

America’s political Grinch struck again: Bernie Sanders blocked the Mikaela Naylon Give Kids a Chance Act—a bipartisan bill to help children with cancer access life-saving treatments—despite it passing the House unanimously and heading for effortless Senate approval. Apparently, even kids with cancer aren’t exempt from a career-long game of political obstruction.

https://www.ms.now/chris-jansing-reports/watch/sanders-blocks-bipartisan-pediatric-cancer-bill-from-passing-2477432387803

The Mikaela Naylon Give Kids a Chance Act honors Mikaela Naylon, a Colorado girl diagnosed with osteosarcoma at age 10, who spent her short life advocating for broader access to pediatric cancer trials. After enduring amputation, multiple relapses, surgeries, and treatments across the country, Mikaela and her family worked with lawmakers so other children might have more options than she did. Before her passing at 16, she shared a simple lesson from her journey: that even in the face of immense hardship, the small things matter less than living life as fully as possible.

Bernie Sanders once again mounted the moral high ground—this time to block a unanimous, bipartisan bill helping children with rare diseases. After promising endless “fighting for the people,” he returned to familiar form: virtue signaling over outcomes. The self-styled crusader against oligarchs lectures from private jets and multiple mansions, while procedural purity trumps human consequences. As Democrats explain losses as “oligarchy” rather than accountability, the contradiction is harder to hide: compassion is proclaimed, obstruction delivered.

https://www.mullin.senate.gov/newsroom/press-releases/release-mullin-champions-bipartisan-give-kids-a-chance-act-condemns-the-grinch-bernie-sanders-for-blocking-the-bill/

Late Sunday afternoon, while most people were debating dinner plans, The Macro Butler was busy on Asharq Bloomberg TV, breaking down the latest twists in the global oil market—and explaining how a return to good old-fashioned gunboat diplomacy could shake supply lines and send prices sailing in 2026.

The interview has been translated into Arabic.

https://themacrobutler.substack.com/p/interview-with-asharq-bloomberg-tv-096

Nvidia is back at the epicenter of the U.S.–China tech war—where a single export restriction can erase $4.6 billion overnight and turn AI from a growth story into a geopolitical weapon. This isn’t about chips anymore; it’s about power, policy, and capital flows in a fractured world.

https://www.tiktok.com/@the.macro.butler/video/7587034570046868754

If you want to understand how to manage risk, not headlines, and position portfolios when geopolitics collide with markets, this is exactly what we teach at The Macro Butler Financial Academy.

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Like a Christmas fairy tale delivered two months late by the Shutdown Circus, the long-lost Q3 GDP print finally arrived: an eye-popping 4.3%, up from an already feverish 3.8% in Q2 and fueled by consumers doing their patriotic duty—spending. It’s ancient history dressed as fresh data, but in a world where every Fed sneeze is treated like scripture, the regime still expects applause for the hottest quarterly growth since Q3 2023.

According to the Ministry of Truth—also known as the BEA—the 4.34% Q3 GDP miracle was proudly achieved by consumers spending harder, government spending returning to virtue, and exports behaving themselves, while investment was quietly ushered out of the room.

Consumption alone did most of the heavy lifting (+2.39%), fixed investment barely showed up (+0.19%, mostly data centers), inventories stopped collapsing (only -0.22%), and net trade was carefully “normalized” to a polite +1.59%. Even government, long a drag, was rebranded as a growth engine (+0.39%). In short: fewer imports, more spending, and just enough statistical choreography to declare victory.

At first glance, the surge in personal consumption looks like a flashing red light for the Fed—proof of an unexpectedly resilient U.S. consumer. But step behind the curtain and the story changes. The bulk of the increase came from healthcare, where spending jumped a staggering 0.76% at an annualized rate.

This wasn’t discretionary exuberance; it was households paying higher health-insurance bills.
Unsurprisingly, inflation followed the script: the GDP price index leapt to 3.8% in Q3 from 2.1% in Q2, crushing the 2.7% forecast. PCE inflation rose to 2.8% from 2.1%, while core PCE came in at 2.9%—right on estimates, but hotter than Q2’s 2.6%. Translation: consumers aren’t splurging, they’re being squeezed—and the price indices noticed.

Overall, it was a stronger-than-expected print—but for all the wrong reasons. With the U.S. labor market deteriorating as it has for much of 2025, this fairy-tale growth number is unlikely to move the needle as the US economy moves in an inevitable inflationary bust.

Despite the officially proclaimed economic “heaven,” the people on the ground seem less convinced. The Conference Board’s December consumer confidence shows the Present Situation falling sharply, while Expectations merely held steady after an unusually generous revision—pulling the headline index down. As Confucius might say: when the statistics shout prosperity but the household sighs, wisdom lies in trusting the sigh.

Beneath the incense smoke, the message is clear. The Present Situation soured as views on business conditions turned negative for the first time since September’s labor scare. The labor market’s weakness continues to spread quietly. Confidence slipped across nearly all ages and incomes; only the very young still hope, and only the Silent Generation grew more cheerful—perhaps because silence expects nothing.

As the Master would say: when optimism survives only in revisions, and reality erodes across households, the cycle has already turned.

After the “stellar” GDP fairy tale and a limp, caffeine-deprived 2Y auction, the Treasury decided to spice up the last coupon week of the year with a $70bn serving of 5-year paper.

The auction cleared at a high yield of 3.747%, up from 3.557% in November and the highest since July, while still managing to tail the When-Issued by 0.1bp. Call it consistency: this marks the 6th tail in the last 7 auctions—a streak that would make even the most loyal dog proud.

The bid-to-cover slipped to 2.35 from 2.41 last month—the weakest since September and now below the recent average of 2.36.
The internals didn’t help the optics. Indirect bidders (read: foreign buyers) took down just 59.5%, the lowest share since September and well under the recent 61.8% average.

But fear not—the auction was rescued by Directs. Taking down 31.7%, they delivered the highest allocation on record, stepping in just in time to keep the show on the road.

As a result, dealers were left holding just 8.8%—tied for the lowest on record, proving that when the music stopped, they barely had a chair at all.

Overall, this was yet another ugly, tailing 5-year auction, and it would have looked outright disastrous had Directs not heroically stepped in at the last minute.

As more investors awaken to the uncomfortable truth that the once “risk-free” asset is now anything but—and one of the riskiest assets to own—yields will be forced much higher in the Year of the Fire Horse, or the Fed will resort to Yield Curve Control, a path that would only hasten the debasement of paper IOUs relative to real assets.