The Bond Market Blowout Scott Bessent Can't Prevent | Alasdair Macleod

Macleod argues that an economic slump would reduce tax revenue while higher bond yields raise government funding costs, creating a sovereign-debt feedback loop. He predicts that a collapsing equity market and rising yields could push the Treasury and Federal Reserve toward renewed money creation, with the U.S. deficit potentially expanding from more than $2 trillion to $3 trillion or $3.5 trillion.

Macleod links food and energy pressures to a broader stagflationary shock: disrupted Ukrainian grain exports, weak European and UK harvests, and El Niño could reduce food availability just as energy and distribution costs rise. He also points to Japan’s roughly 90% dependence on Middle Eastern energy, Brent’s increase from $71.80 to about $101.29, and a potential oil target of $150–$160 based on an unusually wide crack spread.

Macleod expects Japan’s inflation and interest-rate pressures to intensify, citing historical episodes of wholesale-price inflation near 30% and consumer-price growth above 25%, while arguing that a move from the current 1% policy rate to 1.25%–1.5% would not be sufficient. He says efforts to support the yen also undermine the yen carry trade without resolving Japan’s broader economic problems.

Macleod argues that central banks are competing to accumulate gold as confidence in fiat currencies weakens. He also alleges that some European central banks could not retrieve gold held at the Federal Reserve Bank of New York and received dollars instead, while explicitly presenting the custody and leasing claims as allegations rather than verified accounting findings.