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The Ledger Letter
Finance Studio Advisors · Monday, September 21, 2026
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One Arm Raised Rates. The Other Was Buying the Bonds.
On September 16 the Fed lifted its target to 3.75% and 4.00%. The vote was twelve to none. On September 9 the Treasury ran its first enlarged buyback, offering to purchase up to $6 billion of longer dated notes. One arm of the government is making money more expensive. The other is bidding for the debt that money prices. The ten-year closed Friday at 5.006%, the highest since July 2007.
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A Message From Our Partner
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The Breakdown
Today's disagreement: the Fed is tightening the front of the curve while the Treasury supports the back of it, and the long end has moved past both.
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| 01 |
The Hike Was Unanimous
The committee raised its target to 3.75% and 4.00% on September 16. Twelve votes, no dissent. It was the first increase since July 2023. Chair Kevin Warsh, the president's own appointee, carried the whole committee with him.
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| 02 |
The Treasury Was on the Bid
A week before the vote, the Treasury offered to buy up to $6 billion of longer dated notes. That is triple the $2 billion ceiling the program carried before August. The enlarged window runs through November 4.
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| 03 |
The Curve Ignored Both
The ten-year closed Friday at 5.006%, the highest since July 2007. A buyback is a bid under the long end. A hike is a weight on the short end. The long end rose through both.
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A Message From Our Partner
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Reagan Gold Group does not provide financial, legal, or tax advice. This information is for educational purposes only and should not be considered investment advice. All investments carry risk, including loss of principal. Past performance is not indicative of future results. Consult your licensed financial advisor before making investment decisions.
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By the Numbers
| 10-Year Treasury | 5.006%, highest since 2007 | | Fed Funds Target | 3.75% to 4.00%, 12 to 0 | | Treasury Buyback, Sep 9 | Up to $6bn, triple the cap | | Brent Crude | $104.87 | | S&P 500 | About 2% under its record |
Decision and vote per the FOMC, September 16, 2026. Buyback terms per the US Treasury. Yield and index levels for Friday, September 18, 2026.
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Two Hands on the Same Curve
What the Coverage Settled On
Most of the write-ups made Wednesday a story about the chair. Kevin Warsh was handpicked by the president. The White House had spent months asking for cuts. The first thing the new chair did to rates was raise them. He also declined to submit a dot to the projection chart, on the view that it works as forward guidance. The median of the dots his colleagues did submit shows one more increase this year.
The Fiscal Side Was Already Moving
The Treasury had acted first. On August 19 it said it would at least double the size of its liquidity support buybacks. Those cover the ten to twenty year and the twenty to thirty year sectors. The ceiling went from $2 billion an operation to at least $4 billion. The first operation under that mandate, on September 9, offered to buy up to $6 billion. Secretary Scott Bessent called long end liquidity very poor and said his aim was to slow the moves down.
Why the Two Pull Against Each Other
A hike raises the cost of short money and is meant to cool demand. A buyback puts the government on the bid for its own longer dated paper, supporting the price and holding the yield down. Two arms of one state, working the same curve from opposite ends. The gap between them is where your mortgage rate and your bond fund live. So does the discount rate under every long duration holding you own.
What the Long End Did About It
It rose anyway. The ten-year finished Friday at 5.006%, a level last seen in July 2007. Federal debt is past $40 trillion. Brent is above $104. Consumer sentiment came in at 47.8 in the preliminary September survey, the second lowest on record. The October 27 and 28 meeting is live. The projections point to one more move this year. Nothing about the outcome is settled. Watch whether the ten-year holds above 5% into the next buyback. If a bid that size cannot pull the yield down, the supply of paper is setting the long end. Policy is following it.
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The front end answers to a vote. The long end answers to whoever is left holding the paper.
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