US Bond Market Suffers Longest Drawdown as Fed Rate Cuts Questioned and Autonomous Trucks Head to Saudi Arabia

Key Takeaways

• US bond market records its longest drawdown ever as debt adds $715B in two months.
• Fed policy criticized: Charlie Bilello calls for a 50bp hike this month, calling past cuts an error.
• August equities rebound but September is historically the worst month; mixed economic data.
• Autonomous trucking scales first in Saudi Arabia, according to Marc Andreessen.
• Raoul Pal's new book argues debt and demographics are rigged against ordinary people.
• August saw the first full month of national gasoline prices above $4/gallon.

1. Bonds, Rates, and Fed Policy

1. Charlie Bilello says Trump's claims of GDP reaching 14-20% are hollow because massive money printing only inflates nominal GDP, not real prosperity, and risks higher inflation and a weaker dollar. — via 1
2. US national debt has risen by $715B since July 1, pushing the 10-year yield from 4.48% to 4.75%. Bilello argues the Treasury's plan to buy back $4B of longer-dated securities and replace them with short-term debt won't solve the rapid-borrowing problem, keeping upward pressure on rates. — via 1
3. Bilello calls the Fed's 2024-25 easing cycle a policy error, specifically citing the 50bp cut in September 2024 and the subsequent 125bp of cuts. He advocates a 50bp hike this month, followed by 50bp hikes in October and December. — via 1
4. The US bond market has now been in a drawdown for over six years, the longest on record. This aligns with Liz Ann Sonders' note that the 10-year yield closed August at its highest level since January 2025, while stock-bond correlation turned further negative. — via 1 2 3
5. Consumer pain is visible in energy: the US average national gasoline price exceeded $4 per gallon every single day in August, the first full month on record, adding pressure on households and feeding inflation concerns. — via 1

2. US Economic Data and Market Seasonality

1. September is historically the worst month for stocks. Since 1928, the S&P 500 averages a -1.1% return in September, with only a 44% win rate, according to Liz Ann Sonders. August's equity gains may therefore be tested. — via 1
2. Manufacturing is still expanding but decelerating. The ISM manufacturing PMI fell to 54.6 in August, missing expectations and the prior month, with new orders and employment weakening; prices paid held at 71.1. The S&P Global final manufacturing PMI came in at 53.9, above the flash, confirming more than a year of expansion. — via 1 2
3. Labor market is cooling. JOLTS job openings slipped to 7.271 million in July, slightly below consensus; the quits rate fell to 1.9% and the hiring rate to 3.2%, signaling reduced worker confidence and employer pullback. — via 1 2
4. Regional data and fund flows paint a mixed picture. The Dallas Fed manufacturing index (ISM-adjusted) continued to expand, but its services index plunged to 4.2, far below projections, with forward-looking components weak. Meanwhile, in the week ending Aug 28, large-cap ETFs saw the largest inflows while inflation-protected ETFs had the largest outflows. — via 1 2 3

3. Investment Strategy and Big Ideas

1. Lyn Alden cautions that holding low-growth names like Clorox at 30x P/E or buying Treasury bonds at 0.6% yields leads to poor outcomes, a view she says has been vindicated over six years. Her current macro watchlist includes structurally elevated rates, unresolved conflicts, allies' dependence on the US, and a rapid rebound in oil stocks. — via 1 2
2. Clifford Asness argues investment performance must be judged over a long horizon (a "multi-stage game"), pushing back on 2020-21 FinTwit criticism of AQR. He also counters pro-gold arguments: $25,000 placed in the S&P 500 in 1971 would be worth $8.5 million today, while gold wasn't legally investable for individuals in 1971 and a vault gives no housing. — via 1 2
3. Meb Faber shares that the EYLD fund has delivered an 11.49% annualized return over the past decade, besting the MSCI Emerging Markets Index's 9.64%, and carries a Morningstar five-star rating. — via 1
4. Raoul Pal says 21 years of research shows the economic system never served ordinary people; debt and demographics are structural forces rigging the game. His book "The Everything Code," out Nov 3 and now available for pre-order, explains housing-wage divergence, persistent asset inflation, shrinking purchasing power, and political fragmentation—all leading into an "exponential era" that could either crush or empower individuals. — via 1 2

4. Technology and Autonomous Driving

1. Marc Andreessen says autonomous driving reaching national scale has happened faster than he expected. Projects with HUMAIN and TareqAmin will first field thousands of trucks in Saudi Arabia, later expanding into robotaxis, ports, mining, and construction—scale and scope he calls unprecedented. — via 1
2. An AGI timeline dispute remains unverified: @jason disputes a reported claim by Chamath that AGI is far away, citing internal information that Chamath "never boarded a plane" and describing the narrative as psychological warfare. This is unverified and depends on unnamed internal sources. — via 1