US-Treasuries

This is a follow-up to The Hidden Overall Commander of Operation Epic Fury May Have Been the Treasury Secretary. That piece argued that the economic logic of the operation pointed to Scott Bessent as the architect of its financial constraints. One week later, the framework still holds. But the scenario it depended on is under severe strain. The original thesis rested on a single pivot point: the Strait of Hormuz would reopen quickly, Iranian oil infrastructure — deliberately preserved — would become the basis of a deal, and oil prices would fall far enough to solve five of Bessent’s problems simultaneously. ...

In February 2026, Japanese life insurers sold ¥3.42 trillion in foreign bonds — the sharpest monthly exit since October 2024. The entire Q4 2025 figure, itself the largest quarterly reduction since 2008, was compressed into a single month. The Middle East conflict accelerated this. But the conflict did not cause it. That distinction matters more than most commentary has acknowledged. Why the money is moving Japanese life insurers manage liabilities that extend decades into the future. For most of the past twenty years, meeting those liabilities required reaching offshore for yield that Japan’s financial repression could not provide. US Treasuries, European sovereign bonds, dollar-denominated corporate credit — all of it was a workaround for a domestic market where the Bank of Japan kept yields artificially low. ...

On the night of February 28, 2026, Vice President JD Vance monitored Operation Epic Fury from the White House Situation Room. According to WBUR/AP reporting, he was joined by Secretary of Energy Chris Wright, Director of National Intelligence Tulsi Gabbard, and one person whose presence might seem unusual in a military operation: Treasury Secretary Scott Bessent. Defence Secretary Pete Hegseth called the operation “the most lethal, most complex, and most-precision aerial operation in history.” But I find myself wondering: was this operation designed by the military, or shaped by someone who thinks in bond yields, oil futures, and capital flows? ...