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Swan Dive

The Bond Vigilantes Weigh In

Loading ...Addison Wiggin

May 22, 2025 • 5 minute, 27 second read


swan dive

The Bond Vigilantes Weigh In

On this day in 2010, a programmer named Laszlo Hanyecz did something simple, yet world-altering: he traded 10,000 bitcoin for two Papa John’s pizzas. At the time, it was a fun lark. Today, after bitcoin touched $111,000, that greasy dinner would cost over $1.1 billion, or $550 million per pizza.

Bitcoin Pizza day is a fitting anniversary for today’s new nuggets. Let’s begin…

🖊️ There’s a Lot President Trump Can Do—But…

There’s a lot President Trump can do by executive order — and he’s been doing it at a pace that makes even seasoned bureaucrats wince.

In just a few weeks, he’s reinstated oil and gas leases, scrapped electric vehicle mandates, slapped tariffs on Chinese goods, dismantled ESG rules, floated a ban on central bank digital currencies, revived talk of a Mar-a-lago gold commission, started deporting gang members, redirected federal contracts to “America First” suppliers, and leaned hard on Powell to cut interest rates — preferably without worrying too much about the corners.

We’ve been following along just fine.

But for all the movement, he can’t control the federal budget, and more importantly, he can’t control the bond market.

His “big, beautiful” tax and spending plan is already drawing fire from the traders who matter most: the ones pricing 20 and 30-year Treasurys.

The “bond vigilantes” see deficit risks growing like weeds — and they’re jacking up yields in response.

📈 The Vigilantes Are Getting “A Little Bit Yippy”-er, Globally

Ah yes, the bond vigilantes — those unsentimental enforcers of fiscal discipline — are back in earnest.

As we noted late yesterday,  yields at the 20-year auction for U.S. treasuries lept mid-auction in order to attract buyers. The Fed itself had to step in and buy $50 billion to stop the spike.

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As Deutsche Bank’s George Saravelos put it, once Congress passes this tax bill — whatever shape it takes — it’s likely locked in for the rest of Trump’s term.

If bond buyers don’t like what they see, there’s no going back to the drawing board. And no amount of presidential chest-thumping can lower borrowing costs once markets decide to revolt.

But bond vigilantes aren’t just yippy at Washington, they’ve turned against long-dated bonds globally.

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In the U.K., 30-year gilt yields are now higher than they were during the lettuce-era of Liz Truss, when her unfunded tax cut bonanza imploded in under seven weeks.

The global bond market reaction suggests that if politicians can’t figure out how to manage public spending, it will cost them a lot more to finance their politics.


📉 Stagflation Is No Longer a Talking Point

For his part, JPMorgan CEO Jamie Dimon added a splash of cold realism. “I don’t agree that we’re in a sweet spot,” he said, in reference to the notion that the U.S. economy is coasting.

Dimon sees instead stagflation becoming the default setting: sluggish growth, stubborn inflation, and a Federal Reserve that’s basically out of tools. Interest rates are stuck, prices aren’t, and the Fed’s toolkit is starting to look like it came from a secondhand IKEA clearance bin.

₿ On Cue, Bitcoin’s Great Escape

Bitcoin skipped past $111,000 briefly at midnight, then again at 6 a.m. this morning. Mostly, thanks to a cocktail of institutional inflows and legislative progress on stablecoins.

In the past 5 days, since about the time the “big, beautiful bill” started crowding out the media headlines, ₿ up nearly $10k:

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Gold, meanwhile,  is still hanging around $3,400.

It’s not really about crypto or yellow jewelry material at all — it’s about trust.

Or rather, the absence of it.

Bitcoin, for all its volatility, doesn’t come with a Treasury Secretary or a yield curve. It’s the closest thing to “digital gold” in a system full of actors with very loud microphones.

🛢️ Oil Flows Like Campaign Money

 OPEC+ is said to be preparing its third straight production hike, conveniently ahead of the election calendar. The stated reason is to meet demand. The real reason? To make sure Trump doesn’t show up in Riyadh with a grudge and a microphone.

Low gas prices mean calmer inflation data. And nothing soothes voters like seeing $2.99 at the pump. The Saudis know it. Trump’s first trip abroad to the Middle East wasn’t a coincidence. He needed investment in the U.S. to counter Chinese influence globally. And he required cheap energy at home.

🛍️ Target Takes On Water While Rivals Stay Afloat

Retailers are bracing for tariffs and consumer fatigue — and Target is aptly named, taking the full blast. The company reported another earnings miss yesterday and downgraded its full-year outlook from a modest gain to a projected sales decline.

That would mark three years in a row of shrinking top-line revenue, while Walmart, Lowe’s, and Home Depot all managed to hold steady.

What’s dragging Target down? Discretionary sales and a self-inflicted wound. Their quick backpedal on DEI policies sparked a boycott that killed foot traffic for over a month.

Now they say an “acceleration office” using AI will fix things. If buzzwords were revenue, they’d be in the black already.

🧠 The Market’s the Boss

The overriding narrative today: The president can approve pipelines, erase climate regulations, and redirect Pentagon contracts with a signature. But he can’t command trust or will buyers into the bond market.

Capital doesn’t pledge allegiance. It votes with its feet. And when the vigilantes saddle up, even the most aggressive policy agenda can be priced out of reach.

Ah well, while the markets were sorting out trivial global macroeconomic matters, at least Washington politicos managed to reach a consensus on the essential things.

The No Tax on Tips Act, a standalone carve-out from Trump’s broader tax agenda, passed the Senate 100–0 on Tuesday.

First introduced by Ted Cruz and ushered to the floor by a Democrat, it exempts up to $25,000 in tips from federal taxes for workers making under $160,000.

It’s a popular idea, but one with modest impact. Yale’s Budget Lab says only 2.5% of U.S. workers rely on tips, and many don’t pay federal income taxes anyway – but they are consumers.

The average gain? About $1,800 per year. Critics argue it distracts from the fight to raise subminimum wages. But in an election year, even minor tax cuts for waitstaff can carry oversized political weight.

Next up: the House. If it passes, all that’s left is Trump’s signature — and perhaps a few celebratory photo ops at a Waffle House.

~ Addison
Grey Swan


Beware: The Permanent Underclass

October 3, 2025 • Addison Wiggin

Back in the Global Financial Crisis (2008), we recall mass layoffs were driving desperation.

Today, unemployment is relatively low, if climbing.

Affordability is much more of an issue. Food, rent, healthcare, and childcare are all rising faster than wages. Households aren’t jobless; they’re stretched. Job “quits” are at crisis-level lows.

In addition to the top 10% of earners, consumer spending is still strong. Not necessarily because of prosperity, but because households are taking extra shifts, hustling gigs, working late into the night, and using credit cards. The trends hold up demand but hollow out savings.

It’s the quiet form of financial repression. In an era of fiscal dominance, savers see easy returns clipped, workers stretch hours just to stay even, and wealth slips upward into assets while daily life grows harder to afford.

Beware: The Permanent Underclass
Is Tokenization Inevitable?

October 3, 2025 • Ian King

Last month, Nasdaq asked the Securities and Exchange Commission (SEC) for approval to let tokenized stocks and ETFs trade on its main exchange.

If approved, these digital shares would sit side-by-side with traditional equities. Meaning, they would fall under the same U.S. securities laws that govern $50 trillion in annual equity trades.

And this rollout could begin as early as 2026, once the Depository Trust Company — the clearinghouse that settles every U.S. stock trade — updates its systems to handle digital tokens.

If it happens, this won’t be a small tweak to the machinery of finance. It’ll represent the first major step toward moving Wall Street onto blockchain infrastructure.

And we don’t have to imagine what it might look like…

Because it’s already happening.

Is Tokenization Inevitable?
The Myth of Productivity, Again

October 3, 2025 • Addison Wiggin

The launch of ChatGPT in October 2022 ended the pandemic-era bear market in stocks. The AI story has been the predominant narrative for three years now. The indexes on Wall Street are at historic highs, surpassing 2000, 1968, 1929… the last three tech-inspired bubbles.

But ChatGPT did something else. It brought the idea of “productivity gains” back into the economic conversation.

The Myth of Productivity, Again
The Stablecoin Standard

October 2, 2025 • Mark Jeftovic

Stablecoins have proceeded rapidly from being a grey zone through which capital would traverse as it moved into or out of the crypto-economy, to becoming an extension, if not a nascent pillar, of the fiat money system itself.

Coinbase Head of Institutional Research David Duong sees the market cap for stables hitting $1/2 trillion by 2028 (which would be somewhere between a 4X and 5X from where we are now).

Demetri Kofinas recently interviewed Charles Calomiris, former Chief Economist at the US Office of the Comptroller of the Currency, and it was eye-opening to hear someone of his stature speak so matter-of-factly about how the structure of the banking system is evolving in realtime.

The Stablecoin Standard