Title: Haymaker Daily — Not The Way It's Supposed To Work Show: Haymaker (Substack) Author: David Hay / The Haymaker Team Date: 2026-09-01 (SEP 01, 2026) URL: https://haymaker.substack.com/p/haymaker-daily-ae1 Note: Written post — no timestamps; text verbatim from the paid post (captured via Stephen's logged-in session). Four Bloomberg charts (10-year Treasury yields around prior Fed cutting cycles) are not reproduced. Disclosures omitted.
Hello, Haymakers:
The word "unprecedented" is often overused during these tumultuous times. However, when it comes to what has occurred since the Fed began its latest interest-rate easing cycle, it truly qualifies.
(Four-chart sequence necessary to fully convey the point.)
[Bloomberg chart]
[Bloomberg chart]
[Bloomberg chart]
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From the time the Fed began this easing phase, the yield on the 10-year U.S T-note has vaulted from around 3.70% to the present 4.75%. What makes it all the more remarkable is that this cutting cycle began with an emphatic 0.50% (50 basis points) reduction.
As the preceding charts make clear, going all the way back to 1970 the consistent reaction to the inception of an actual Fed rate-cutting cycle has been for longer-term Treasury yields to recede.
The reasonable question is: Why is this time different?
It is fair to note there have been some brief rate-cutting cycles, such as in 1998, when the Fed cut on an emergency basis while the economy was still robust. However, this was known as a "mid-cycle" adjustment in reaction to, at that time, the Asian Crisis and the related implosion of the Long-Term Capital Management hedge fund. Less than a year later, the Greenspan-led Fed was hiking again, and would do so three times.
The likely causes for the current deviation from the previous pattern is due to the combination of deep, recession-like deficits during an ongoing economic expansion and the voracious capital needs of the AI build-out. It could also be attributed to the reality that the Fed began this easing period when the economy was not in the early stages of a downturn. In that way, there are some similarities with 1999 when the first tech bubble (it's now necessary to distinguish between them) also continued inflating.
A massive difference versus 26 years ago is that the U.S. government was running such large surpluses back then that there were concerns all federal debt would be extinguished over the next 10 to 15 years. Undoubtedly, younger people will find that nearly impossible to believe based on the present pathetic state of America's fiscal condition.
This deep fiscal hole leaves the Treasury bond market, and the economy, extremely vulnerable to longer-term rates continuing to hit the highest levels in a generation. Based on his recent yield-manipulation gambit, it's clear Treasury Secretary Scott Bessent is fully cognizant of those risks.
The Haymaker Team