Title: Haymaker Daily — Reality Denial, Treasury Style Show: Haymaker (Substack) Author: David Hay / The Haymaker Team Date: 2026-08-25 (AUG 25, 2026) URL: https://haymaker.substack.com/p/haymaker-daily-f3f Note: Written post — no timestamps. Paid post; body captured via Stephen's logged-in session. Verbatim body below (disclosures omitted).
Hello, Haymakers:
There is a titanic struggle underway between U.S. Treasury Secretary Scott Bessent and the long-term government bond market. BofA's Chief Investment Strategist Michael Hartnett refers to the 5% yield level on the 30-year T-bond as the Maginot Line. Hopefully, for the sake of his fraying credibility, Mr. Bessent's defensive efforts will be far more effective than were France's fortifications against Hitler's blitzkrieg back in 1940.
[Hartnett chart]
Ominously, the man who many consider to be the greatest investor of all-time, Stan Druckenmiller, wrote a highly critical Op-Ed on Mr. Bessent's ploy, published in today's Wall Street Journal.
Here's a key excerpt:
Governments defending prices against fundamentals always lose... The U.S. shouldn't put itself on the wrong side of that trade, not with the most important price in the world, and not when that price is trying to say the one thing Washington most needs to hear: Let the bond market speak.
Based on the historic tendency of the yield on the 30-year T-bond to roughly track the annual rate of change in nominal U.S. GDP, Mr. Druckenmiller has a good point.
[Bloomberg chart]
Studying the above chart, we see that in the disinflationary phase from 1986 through around 2007, the rate of return on long government bonds was actually above the annual increase in GDP, including inflation (i.e., nominal GDP), nearly all of the time. Since the Global Financial Crisis, however, it's been a different story, particularly over the last decade.
During that timeframe, the Fed employed a variety of ultra-easy monetary policies. Those have been rewarding for stock market investors but they've had the opposite effect for bond holders. As we anticipated, the latter have ended up as the bag holders for America's fiscal and monetary recklessness. Consequently, the last five years have represented one of the worst return phases for U.S. Treasury investors on record, despite (or because of) long bond yields consistently running below inflation.
Predictably, Mr. Bessent's attempt to artificially suppress long-term bond yields, often referred to as Yield Curve Control (YCC), immediately lit a fire under precious metals and Bitcoin, while concurrently weakening the U.S. dollar.
Should YCC become de facto U.S. policy, it will almost certainly push real assets even higher over time. On the other hand, if long-term bond yields are allowed to find their own level — most likely, materially higher — the impact on the economy, stocks, real estate, commodities, housing prices, and the federal deficit (did we leave anything out?) is equally probable to be extremely adverse. Accordingly, if Stan Druckenmiller's advice is followed, the pain will be immediate. If not, it will be delayed, but there's little doubt it will come with a much stiffer eventual price tag.
The Haymaker Team