Capital Flows
· Capital Flows
· September 04, 2026 at 20:15
· ⏱ 1 min read
| Read on Substack ↗
Summary
Bond volatility remains unusually low even as policymakers are characterized as running an accommodative policy into strong nominal GDP, which the author frames as complacency before a potential cliff. The core market risk is a repricing of carry trades and long-duration interest-rate exposure once policy errors crystallize.
•Bonds are described as still in a low-volatility regime: realized volatility has only ticked up 'marginally,' and the MOVE index remains low.
•The article says Warsh and Bessent are taking an 'overly accommodative stance into heightened nominal GDP,' implying monetary/fiscal policy is looser than the macro backdrop warrants.
•The greatest risks are identified as the carry trade and interest-rate risk, which the author says are being 'actively manipulated by policy actors' operating on political-cycle incentives rather than market P&L constraints.
•No specific bond security, ETF, or explicit long/short position is disclosed in the article; the actual long-term bond strategy is only referenced as a separate 'Read more' section.