MPC Markets Morning Call — 21st August 2026: ‘Bessent Put’ Fades as Bond Selloff Resumes
Wall Street sold off as Treasury Secretary Bessent’s surprise bond buyback expansion proved fleeting relief, with the S&P 500 shedding 0.9% while 30-year yields climbed back to 5.25%. Hawkish FOMC minutes revealing a 9–3 split on rate hikes, oil surging past $93 on Trump’s “economic D-Day” threat against Iran, and a rare sales miss from Walmart compounded a session where every attempted rally was sold.
Thursday’s session delivered a stark verdict on the Treasury’s attempt to rein in borrowing costs: the “Bessent put” lasted barely 24 hours. The S&P 500 fell 0.9% to 7,642.69, the Dow dropped 1.3%, and the Nasdaq shed 1.0% as rising yields, surging oil and a rare earnings miss from Walmart converged on risk appetite. The 10-year Treasury yield pushed through 4.70% — higher than before Wednesday’s buyback announcement — while the 30-year yield hit 5.25%. July FOMC minutes showed three dissenting officials favoured a rate hike, reinforcing the view that the Fed’s next move could still be up. Oil surged for a fifth straight session as Trump declared “economic warfare” against Iran and Bessent signalled a Monday press conference to unveil the plan. Gold firmed to $4,586 on safe-haven flows. ASX 200 futures point to a softer open, down 0.3% to 8,991.
S&P 500 fell 0.9% to 7,642.69, Dow –1.3%, Nasdaq –1.0% — Treasury’s buyback relief reversed within 24 hours as 10-year yields pushed above 4.70%.
FOMC minutes revealed a 9–3 vote split, with three officials favouring a 25bp hike — “many” policymakers see rate hikes likely if inflation does not decline.
Trump declared “economic D-Day” against Iran, pushing Brent crude to $93.88 (+2.5%) — oil now up more than 7% for the week and nearly 40% year-on-year.
Walmart slumped 9.5% after posting its weakest comparable sales growth in six years (2.6% vs 3.8% expected), dragging consumer staples and discretionary sectors lower.
US public debt crossed $40 trillion for the first time, while Bessent flagged an imminent “fiscal consolidation” announcement and bigger buyback potential.
ASX 200 futures –0.3% to 8,991 — no domestic data scheduled today; key watch is August flash PMIs from the US, UK, eurozone and Japan.
The ‘Bessent Put’ Proves Fleeting
Treasury Secretary Scott Bessent’s surprise announcement on Wednesday — doubling the size of long-dated bond buybacks to at least $4 billion — briefly sent yields tumbling. But the rally lasted barely a day. By Thursday’s close the 10-year yield had pushed 5 basis points higher to 4.70%, well above pre-announcement levels, while the 30-year yield rose 6bp to 5.25%.
The reversal came as total US public debt crossed $40 trillion for the first time, a headline that reignited fiscal concerns. Bessent dismissed the market response as “noise,” telling CNBC “anything that happens within a 24-hour period is noise” and hinting the buyback programme “could be more than the $4 billion” planned. He also flagged an imminent fiscal consolidation plan.
“My view is that the ‘Bessent put’ is still going to fail to keep yields down from multi-decade highs over the longer term. Making yields go down over the longer period will require the painful work of bringing down the debt.”
An auction of 30-year TIPS drew the strongest demand since December 2020, with a bid-to-cover ratio of 2.82, suggesting some institutional appetite for inflation protection remains healthy even as nominal yields march higher.
Fed Minutes: Three Dissenters Wanted a Hike
July FOMC minutes published Wednesday revealed a more hawkish committee than markets had priced. The Fed held rates at 3.50–3.75% in a 9–3 vote, but three regional presidents dissented in favour of a 25bp increase. The minutes showed “many” policymakers saw rate hikes as likely if inflation failed to decline, while “most” supported the July hold.
Inflation risks were described as “skewed to the upside,” with many participants noting the re-escalation of the Middle East conflict had “significantly clouded” the outlook. Traders are now pricing a roughly 30% probability of a September hike, down from over 70% at the end of July after softer CPI data and weaker retail sales.
“There’s a lot of discussion about our credibility. I don’t see our credibility at risk. I also hear a lot about, should we be making preemptive hikes? And I don’t see a lot of evidence that that’s an urgent problem to solve.”
Trump’s “Economic D-Day” Sends Oil Past $93
Oil surged for a fifth consecutive session as President Trump declared “economic warfare and isolation on an unprecedented scale” against Iran. Brent crude rose 2.5% to $93.88 and WTI advanced 2.3% to $87.83 — their highest levels in nearly a month. Crude prices are now up more than 7% for the week and almost 40% year-on-year.
The Strait of Hormuz standoff shows no sign of resolution. Commercial traffic has slowed to a fraction of pre-war levels despite US claims of control. Trump warned that “any country” providing a “lifeline” to Iran would face “tremendous economic consequences,” while Bessent told CNBC he would hold a Monday press conference on the plan to “collapse this regime.”
Iran’s foreign minister Abbas Araghchi dismissed the threat as a “diversion from America’s own crisis: unprecedented debt & surging interest costs.” The June framework Memorandum of Understanding lapsed this week with no indication it will be renewed.
Reuters analysis warns the Iran war energy crisis “is just getting started.” European diesel prices have surged 70% since the war began, US gasoline 60%. More than 20% of Middle East refining capacity has been knocked out, and global oil stocks are falling at 3.5 million bpd. US diesel inventories are at their lowest for this time of year in three decades.
Walmart’s Rare Miss Tests Consumer Confidence
Walmart shares slumped 9.5% — the retailer’s biggest single-day drop since May 2022 — after reporting comparable sales growth of just 2.6%, well short of the 3.8% analysts expected. It was the first time in at least five years Walmart’s same-store sales missed consensus. Average spending per transaction grew just 1.1%, down sharply from 3.1% a year earlier, as rising gasoline prices squeezed consumer budgets.
The result dragged the broader consumer sector lower. Costco, Dollar Tree and Albertsons all followed Walmart down, while fuel-sensitive names like Royal Caribbean and Carnival also fell. Nine of eleven S&P 500 sectors closed in the red, with only energy (+0.4%) and real estate managing gains.
“For the consumer economy, this is like Nvidia posting a slowdown. Walmart has been winning the trade-down trade, but that tailwind may be fading.”
On the positive side, Deere surged 5.8% after beating on both earnings ($5.10 vs $4.69 est.) and revenue ($12.61B vs $10.81B est.), raising the lower end of its full-year net income guidance. Bitcoin topped $72,000 (+5.4%) after Trump urged Congress to pass the Clarity Act for crypto regulation. Crypto-related shares rallied sharply.
Gold Eyes $5,000 as Safe Havens Catch Bids
Gold firmed 0.9% to $4,586.20 and silver surged 2.4% as precious metals caught bids from both rate-hedge and geopolitical safe-haven demand. Morgan Stanley published a bullish outlook, saying gold has reached its Q4 target of $4,450/oz “faster than expected” and sees a path to above $5,000/oz in 2027.
Central bank buying continues apace — China has added 60 tonnes so far this year, its most since 2023, while Poland has added 82 tonnes towards a 700-tonne target. Morgan Stanley noted gold has begun “decoupling from long-term real yields,” pricing fiscal concerns behind higher yields rather than the yield level itself.
Alphabet’s Record Kangaroo Bond Headlines a Quiet ASX Day
ASX 200 futures are pointing to a softer open, down 28 points or 0.3% to 8,991. The Australian dollar softened to 0.7112 after weaker-than-expected July employment data reinforced expectations the RBA will keep rates on hold for an extended period.
The standout domestic story was Alphabet’s record-breaking $5.5 billion kangaroo bond — the largest corporate bond sale in Australian history outside the banking sector. The deal attracted $20 billion in orders from more than 200 investors worldwide, with Australian investors taking 60% of the allocation. Fund managers expect rival hyperscalers to follow Alphabet into the Australian market before year-end.
Elsewhere, James Hardie announced it would sell its European operations to Holcim for €840 million ($1.38 billion), while Fisher & Paykel lifted its FY27 revenue and profit guidance on strong demand for respiratory products.
The ASX faces a heavy earnings day with Charter Hall, TPG Telecom, GQG Partners, Guzman y Gomez and Accent Group among those reporting. No major domestic economic data is scheduled. Globally, the key watch is the August flash PMI readings from the US, UK, eurozone and Japan, along with Japan CPI inflation (consensus: core 1.8%) and UK retail sales. In the US, FOMC member Musalem speaks. After the bell, Ross Stores and BJ’s Wholesale report.
