In short: after a weak 2Y auction, the 5Y followed suit — another forgettable sale as investors keep bailing on what was once the “risk-free” asset, now looking like the riskiest ticket to ride in the looming Trump Stagflation.

As the “Malthusian” West frets about sanctions, China is busy finding creative detours — like suddenly importing record volumes of “Indonesian” crude from a country that barely produces enough for itself. In August alone, Beijing hauled in 2.7 million tons — 630,000 barrels a day — a curious feat given Indonesia’s domestic demand is triple its output. Translation: China just turned sanction-dodging into an Olympic sport.

China’s “officially zero” Iranian crude imports keep magically reappearing with new passports. After months of Malaysia “exporting” more oil than it pumps, its reported flows to China plunged 30% — just as Indonesia’s mysteriously surged. Tankers now stop by Kabil, a port with no crude-export facilities, grab a new identity for their cargo, and head to China. One trip even involved taking oil from a U.S.- and U.K.-sanctioned tanker before unloading at a terminal later blacklisted by Washington — and then turned around for another run. Same oil, new flags, same game.

In a nutshell, China has turned sanction-dodging into an art form, rebranding Iranian oil as “Indonesian” and sailing it home under a parade of fresh flags.

The ever-optimistic, propaganda-ready US Q2 GDP print magically jumped from 2.96% to a final 3.83% — its best showing since Q3 2023 — thanks to a conveniently “strong” consumer who somehow spent more despite being visibly broke. Imports fell (helpful math trick), inventories dragged, and government spending was flat — but voilà, growth! Nothing like a little statistical alchemy to keep the recovery narrative alive.

Industry-wise, Q2 GDP got a big boost from private goods production (+10.2%) and services (+3.5%), while government shrank (-3.2%). Real gross output rose 1.2%, with services doing most of the heavy lifting. The BEA’s annual update tweaked the past five years slightly but kept average growth at 2.4% — a neat narrative of pandemic rebound turned “steady trend,” even if inflation still looms in the background.

In a nutshell, US Q2 GDP “soared” to 3.8% — a masterclass in statistical alchemy where broke consumers spend big, imports vanish, and the recovery tale lives on.

As the world inches closer to World War 3, as the self-styled “Peace Maker In Chief” seems ready for a showdown with the Global South — and in the midst of this geopolitical drama, the U.S. Treasury capped the week with a $44 billion 7-year auction, yielding 3.953%, just a smidge above last month and tailed its When-Issued by 0.6 bps, the largest wobble since August 2024.

The bid-to-cover tumbled to 2.395, down from 2.489 in August — the lowest since March 2023 — but the real shocker was the internals: foreign buyers (Indirects) plunged from 77.5% to 56.4%, marking the steepest monthly drop in four years and the lowest overseas demand since the near-disastrous 7-year auction of March 2021.

Meanwhile, Directs swooped in for 31.6% — up sharply from 12.8% in August and among the highest on record — leaving Dealers with 12.0%, up from 9.79% last month, painting a picture of an utterly abysmal demand breakdown.

All told, this was the ugliest 7Y auction since 2021 — and the worst of the week — as investors increasingly shrug off Wall Street fairy tales, fully aware that in a Trump stagflation fueled by wars, the “once risk-free” Treasury is anything but.

Donald Copperfield, still convinced he’s an expert in economics and geopolitics after skimming the Cliff Notes, now wants to hand out tariff cash to farmers hurt by his own trade wars — promising they’ll be “making a fortune” eventually. Meanwhile, American farmers are drowning in low prices and a soy embargo from China, and GOP lawmakers are begging for a rerun of Trump’s $23 billion farmer bailout show from last season.

https://www.youtube.com/shorts/aJB1OkKm2-c

Donald Copperfield’s tariff magic didn’t just backfire — it torched $27 billion in farm income, with soybeans losing $9.7 billion a year for the privilege of “winning” the trade war. Now Agriculture Secretary Brooke Rollins is launching an antitrust probe into seed and fertilizer suppliers, while farmers cough up record prices for the very inputs made more expensive by tariffs. Nothing screams “America First” like bankrupting your own farmers so you can save them later with taxpayer bailouts.

In a nutshell, tariff magic turned $27B of farm income into smoke, left soybeans in the red, and now promises farmers a bailout encore — all in the name of “winning” the trade war.

As reliably as Monday follows Sunday, August’s PCE popped 0.3% (up from July’s 0.2%), pushing YoY inflation to 2.7%. Core PCE rose 0.2% — just enough to keep the Fed sweating at 2.9%.

Once again, “Supercore” was driven by financial services (thank you, stock market), plus pricier food and transport — definitely not tariffs, no sir.

Prices may be behaving, but incomes (+0.4% MoM) and spending (+0.6% MoM) came in just hot enough to remind the Fed that the consumer still hasn’t gotten the memo about cooling down.

In a nutshell, August’s PCE says inflation is still simmering, with hot incomes and spending keeping the Fed’s “cooling” narrative on ice.

🤵 The Macro Butler Weekly Digest 🤵

🌐 From samurai swords to zombie firms, Japan’s meteoric rise meets its match as Keynesian follies push the nation toward a sovereign debt cliff. 🌐

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Wall Street never misses a chance to inflate a bubble, and now Nvidia — led by its rockstar CEO — is teaming up with the “nonprofit” OpenAI for the latest magic trick: a chip-leasing scheme. OpenAI gets to dodge capex and depreciation, Nvidia keeps the GPUs (and the collateral), and everyone gets to pretend this is innovation rather than financial engineering straight out of the dot-com bubble playbook.

Call it cynical, but we all have seen this movie before — and it doesn’t end well.

https://sherwood.news/tech/report-nvidia-may-lease-its-chips-to-openai-as-part-of-deal/