David Hay — Haymaker Daily: O for 3 On The Three 3s — Bessent scored against his own late-2024 targets: ~2% GDP vs 3%, +400,000 b/d of oil vs three million, and a deficit near 6% of GDP vs 3%, with DOGE's $2 trillion cut goal walked down to ~$200 billion while outlays actually rose ~$300 billion; Jim Grant's 8.4% Y/Y surge in publicly held Treasury supply makes the yields harder to hold, and the YCC precedent is Japan — the yen down 40% vs the dollar in a decade and over 80% against gold (Aug 26 2026)

The direct sequel to yesterday's Daily, and the method is simple: score the policymaker against his own published targets. "The irony stems from his much ballyhooed plan during the early months of the Trump administration to achieve a 3% real GDP growth rate, three million barrels per day of increased oil production and, most relevant to this note, a 3% budget deficit. Unfortunately, the administration has achieved none of those objectives." The scoring is done fairly rather than rhetorically — "to be fair to Mr. Bessent and the rest of Team Trump, the GDP target hasn't been 'bigly' missed. That has averaged roughly 2% since he unveiled his Three 3s in late November 2024" — before the two whiffs: "U.S. oil output has increased by just 400,000 barrels/day, despite the incentive of higher prices caused by the war against Iran," and "the federal deficit as a percentage of GDP is running near 6%, basically double Mr. Bessent's 3% target," with "no improvement in sight." The DOGE sequence is given as the walk-down it was: an initial goal "in the fall of 2024… to slash federal outlays by $2 trillion. By February, that was revised to $1 trillion. Two months later, the objective was reduced to around $200 billion. The reality is U.S. government expenditures have increased by approximately $300 billion" — "borderline comical considering the intent." Then the mechanism that connects the fiscal miss to yesterday's bond fight: "per the venerable Jim Grant, the lead author of Grant's Interest Rate Observer, the new supply of Treasuries held by the public has surged by 8.4% on a year-over-year basis," which besides "implying the government's accounting is overly flattering to the actual deficit," makes "Mr. Bessent's job of holding down long-term interest rates challenging in the extreme." The market has already voted — his "stealth attempts at so-called Yield Curve Control (YCC) have already weakened the dollar and, more graphically, reignited vigorous rallies in gold and Bitcoin" — and the precedent is named: "Japan's multi-decade experiment with YCC was a prime factor in the yen's 40% value shrinkage vs the dollar over the past decade," while "relative to gold, the yen's value loss has been truly breathtaking, exceeding 80%. This vividly illustrates the extreme monetary debasement risk of YCC policies."

One-line take: a macro-only Daily — no security is named — built on the least glamorous and most reusable piece of analysis in the archive: go back to the target the policymaker published, and mark it. The Three 3s were announced in late November 2024 — 3% real GDP, three million extra barrels a day, a 3% deficit — and each is scored against outcome. GDP: "hasn't been 'bigly' missed… roughly 2%," and Hay says so explicitly "to be fair," which is what makes the other two land. Oil: "just 400,000 barrels/day" against a three-million target, and the aggravating clause is the one that matters analytically — that shortfall occurred "despite the incentive of higher prices caused by the war against Iran." A supply response that fails to appear even at a high price is not a policy failure but evidence about the resource base, and it is the strongest corroboration in this archive of Haymaker's standing energy-shortage thesis. Deficit: "near 6%… basically double" the 3% target, with "no improvement in sight." The DOGE sequence is included as the clean anatomy of a promise dissolving — $2 trillion → $1 trillion → ~$200 billion → outlays actually up ~$300 billion — a walk-down that is only visible if you write down the original number and refuse to update it. Then the note does the thing that separates it from a political scorecard: it converts the fiscal miss into a bond-market mechanism. Per Jim Grant, "the new supply of Treasuries held by the public has surged by 8.4% on a year-over-year basis" — and Hay draws the two inferences properly. First, that supply growth exceeding the reported deficit implies "the government's accounting is overly flattering to the actual deficit": issuance is the harder number, because bonds sold cannot be netted or reclassified. Second, it makes yield suppression "challenging in the extreme" — a defended price facing rising supply requires an ever-larger bid, which is precisely how a peg becomes a printing operation. The consequence is drawn from a live precedent rather than theory: "Japan's multi-decade experiment with YCC was a prime factor in the yen's 40% value shrinkage vs the dollar over the past decade," and against gold "exceeding 80%." That last comparison is the note's sharpest instrument — measuring a currency against another currency understates a debasement in which both are being debased; measuring it against gold removes the shared denominator. The market's current read is already consistent: YCC attempts "have already weakened the dollar and… reignited vigorous rallies in gold and Bitcoin." Nothing rowed: gold, Bitcoin, the dollar and the yen are discussed as currencies/asset classes, no vehicle is named and no ticker is inferred.

1. Key points

The setup — yesterday's fight, today's irony

Continuity is explicit: "as discussed in yesterday's Daily, he's in a major tussle with the long-term Treasury Bond market as he attempts to keep yields from ripping higher."
The framing device: "life is full of ironies and one of the most ironic is what's happening to Treasury Secretary Scott Bessent."
The irony is not that he is losing a fight, but that his own stated programme would have prevented it.

The Three 3s — the published targets, and the date they were published

"His much ballyhooed plan during the early months of the Trump administration to achieve a 3% real GDP growth rate, three million barrels per day of increased oil production and, most relevant to this note, a 3% budget deficit."
Dated so the scoring window is unambiguous: "since he unveiled his Three 3s in late November 2024."
Verdict: "unfortunately, the administration has achieved none of those objectives."

Score #1 — GDP, the near miss, marked fairly

"To be fair to Mr. Bessent and the rest of Team Trump, the GDP target hasn't been 'bigly' missed. That has averaged roughly 2%."
The concession is doing structural work: crediting the one target that was nearly met is what gives the other two scores credibility.
"However, the second two have been total whiffs."

Score #2 — oil, and why the miss is evidence rather than a scandal

"U.S. oil output has increased by just 400,000 barrels/day" — against a three-million-barrel target, roughly an eighth of it.
The aggravating condition is the analytical point: this happened "despite the incentive of higher prices caused by the war against Iran."
Read that way, the miss is not about permitting or politics — a supply response that does not appear at a high price says something about the resource base itself, and corroborates the standing energy-shortage thesis running through Aug-4 and Aug-19.

Score #3 — the deficit, the one that matters here

"Yet it's the budget deficit target that is a particularly glaring miss."
"The federal deficit as a percentage of GDP is running near 6%, basically double Mr. Bessent's 3% target."
And no mean reversion is expected: "unfortunately for what's left of America's fiscal probity, there is no improvement in sight."

DOGE — the anatomy of a walk-down

The sequence, in full: "DOGE's initial goal in the fall of 2024 was to slash federal outlays by $2 trillion. By February, that was revised to $1 trillion. Two months later, the objective was reduced to around $200 billion."
The outcome ran the other way entirely: "the reality is U.S. government expenditures have increased by approximately $300 billion."
Hay's own verdict on the gap between intent and result: "borderline comical considering the intent." The lesson is procedural — a target revised in stages is invisible unless the original number is written down and left alone.

Jim Grant's supply number — the harder measure of the deficit

"In practical terms, it may be even worse as a result of a tsunami of new issuance."
The number and its source: "per the venerable Jim Grant, the lead author of Grant's Interest Rate Observer, the new supply of Treasuries held by the public has surged by 8.4% on a year-over-year basis."
Inference one — the reported deficit understates the borrowing: this implies "the government's accounting is overly flattering to the actual deficit." Issuance is the harder figure because bonds sold cannot be netted, reclassified or timed away.
Inference two — the mechanism against yesterday's peg: "this supply deluge is making Mr. Bessent's job of holding down long-term interest rates challenging in the extreme."

The market's verdict, again

"His stealth attempts at so-called Yield Curve Control (YCC) have already weakened the dollar and, more graphically, reignited vigorous rallies in gold and Bitcoin."
The same three-way signature recorded in Aug-25 — metals up, Bitcoin up, dollar down — is treated as the market pricing an administered long rate.
Note the word "stealth": the policy is being run without being announced as such, which is why the asset-price reaction is the primary evidence that it is happening.

Japan — the live precedent, measured twice

The political temptation is conceded before the counter-argument: "while trying to put a lid on long-term Treasury yields might be politically expedient, Mr. Bessent should bear in mind…"
Against the dollar: "Japan's multi-decade experiment with YCC was a prime factor in the yen's 40% value shrinkage vs the dollar over the past decade."
Against gold, which is the more revealing measure: "relative to gold, the yen's value loss has been truly breathtaking, exceeding 80%."
The gap between the two readings is the argument — a currency measured against another currency understates a debasement in which both are debasing. "This vividly illustrates the extreme monetary debasement risk of YCC policies."

Housekeeping

Two exhibits referenced in the original and omitted from the saved text: a David Stockman chart (federal deficit as a share of GDP) and a Bloomberg chart (the yen measured against the dollar and against gold).
No security is named anywhere in the post; gold, Bitcoin, the dollar and the yen appear as currencies/asset classes only, and no ticker is inferred.
Signed "The Haymaker Team."

2. In plain English

In late 2024, before taking office, Treasury Secretary Scott Bessent set out a plan he called the "Three 3s": grow the economy by 3% a year after inflation, increase American oil production by three million barrels a day, and shrink the federal budget deficit to 3% of the economy. Hay's method in this note is simply to go back and mark that homework — which is more useful than it sounds, because published targets are usually quietly restated rather than scored.

Growth: close enough to be credited. It has averaged about 2% rather than 3%, and Hay says so explicitly "to be fair." Giving credit where the target was nearly met is what makes the other two verdicts worth reading.

Oil: a large miss — production is up about 400,000 barrels a day, roughly an eighth of the goal. The detail that matters is when it happened. Oil prices have been high because of the war with Iran, and a high price is the strongest possible incentive to drill. American producers didn't respond anyway. That is not really a political failure; it says something about how much cheap oil is actually left to bring out of the ground, and it is the single best piece of support in this week's notes for Haymaker's long-running view that the world is short of oil.

Deficit: the big miss, and the one the rest of the note is about. The government is running a shortfall of close to 6% of the economy — twice the target — with, in his words, "no improvement in sight." The irony he keeps returning to is that DOGE, the cost-cutting effort that was going to fix precisely this, kept lowering its own ambition: from cutting $2 trillion of spending, to $1 trillion by February, to about $200 billion two months later. Meanwhile actual spending went up by roughly $300 billion. You can only see that walk-down if you wrote the first number down and refused to quietly replace it.

The bridge from the deficit to the bond market is the most important part. Jim Grant, who has published Grant's Interest Rate Observer for decades and is one of the most respected bond analysts alive, points out that the amount of government debt held by the public has grown 8.4% in the last year. That is a bigger increase than the reported deficit would imply, and Hay draws the right conclusion: the borrowing is the reliable number. A government can present its deficit favourably with accounting choices, but the bonds it actually sells are counted by the market, one at a time. If issuance is growing faster than the stated deficit, the stated deficit is flattering.

And this is exactly what makes yesterday's fight so hard to win. Bessent is trying to hold long-term interest rates down while the supply of long-term bonds is surging. More supply, at a price the seller is trying to hold up, means someone must keep buying at that price — and eventually the only buyer willing to do that is the central bank, with newly created money.

Which is where Japan comes in, because Japan already ran this experiment. It capped its long-term bond yields for years. Its bonds did not collapse; the yen did. Over the past decade the yen has lost about 40% of its value against the US dollar. That number understates it, though, because the dollar is being expanded too — comparing two currencies that are both losing value hides how much is being lost. Measured against gold, which nobody can print, the yen has lost more than 80%. That contrast between the two measurements is the real lesson: when a government holds interest rates below where the market would set them, the pressure doesn't disappear, it moves into the currency. And the currency's decline is only fully visible when you measure it against something that can't be created.

The market appears to have worked this out already. Hay notes that the stealth attempts at yield curve control have weakened the dollar and set off strong rallies in gold and Bitcoin — the same three moves happening together that he flagged the day before, and the recognisable signature of money moving out of a managed currency and into things that can't be printed.

Macro viewpoint — no security named (gold, Bitcoin, the U.S. dollar and the yen are discussed as currencies/asset classes; no ticker is inferred). Summary derived from the paid Haymaker Daily (text in transcript.txt) for personal study. Charts referenced in the original (David Stockman / Bloomberg) are omitted. Not investment advice. © Haymaker / David Hay for source material.