Every major government on earth found out what its debt costs this week, all at once.
Japan's 10 year hit 3% yesterday. First time since 1996. Britain's 10 year went to 5.25% and the 30 year is at a 30 year high. Germany's 10 year hit 3.35%, highest since 2011. France went to 4.21%, highest since 2008. The US 30 year touched 5.27% and the 10 year 4.79%, highest since January 2025.
You'll hear this called a fiscal crisis. When yields fall you'll hear a recession is coming. There's always a story… here’s what I actually think is happening.
4 things are pushing this and they're all pushing the same way.
Oil first. The Iran conflict has energy climbing and energy feeds straight into inflation. Those who spent 2 years pricing rate cuts have flipped to pricing hikes.
Then central banks. Warsh said at Jackson Hole he'd raise if inflation doesn't improve, and 3 FOMC members already dissented in July wanting hikes. Euro zone inflation came in above 3% in August, which has all but locked in an ECB move this month. UK markets have a November hike at roughly 70% and a second by February at 80%. Bessent is publicly pushing Japan to tighten, and the BOJ meets September 17-18 with sources saying they're going.
Third is supply, and this is where it gets uncomfortable…
US debt just crossed $40 TRILLION. Every G7 country except Germany is now above 100% of debt to GDP. Governments have to sell ENORMOUS amounts of paper into a market where net foreign private demand for Treasuries fell to $16.6 billion in June. More supply, fewer buyers, and the price adjusts.
4th is the one almost nobody connects to any of this.
Alphabet, Amazon, Meta, Microsoft and Oracle have issued $220 BILLION of bonds this year to fund data centres. That's more than DOUBLE their total for all of last year. Global corporate issuance has hit a record $4.9 trillion in 2026, up 14%.
So governments and hyperscalers are drawing from the same pool of capital at the same time. Someone has to pay more, and right now everyone is.
The US Treasury has already responded. Bessent doubled the size of long-bond buybacks from $2 billion to at least $4 billion, running September through November. It worked for about a week. The 30 year dipped to 5.19% and then crept straight back up.
Here's where I think this goes.
I don't think we get a bond crisis. Governments have too many tools and they will use every one of them before they let an auction fail. The buyback expansion is the first of many.
What I think we get instead is years of higher-for-longer that almost NOBODY has planned for…
Mortgages that don't go back to 5%. They're at 6.89% now, up from 6.01% in February, and they follow the 10 year rather than the Fed, so cuts wouldn't fix it anyway.
Corporate refinancing at rates that quietly eat margins for the next decade. Every company that borrowed in 2020 and 2021 has to roll that debt at double the coupon.
Governments spending more on interest than on things voters can see. The US is already there.
And here's the part I think the market has not priced.
When the discount rate rises, expensive stocks get repriced hardest and boring cash-generating businesses get repriced least. That's arithmetic, not opinion. A company earning money today is worth roughly the same at any rate. A company promising earnings in 2032 is worth dramatically less at 5% than at 2%.
Every year this persists, the gap between those 2 groups widens.
If I'm right, the next few years reward the EXACT OPPOSITE of what the last few did. Not the story stocks. The ones already making money, at prices that already reflect the bad news.
That's what I've been buying, and it's why I've been posting about businesses NOBODY talks about instead of whatever is trending right now.
I put 5 of them in The Assembly this week. All in the buy zone right now, all with the entry and reasoning attached.
Join today and buy them at my price, or find out about them in a few months when they're much higher. Your choice.
See the list of stocks I’m buying here: intheassembly.com
