Weekly house view | The “Bessent put”
The week in review
Last week, the US Treasury Department announced it would double buybacks of long-term US debt. Treasury Secretary Scott Bessent said the US government would increase quarterly purchases of 10- to 30-year Treasuries from USD 38 bn to USD 58 bn. The move came after a sharp sell-off in long-dated government bonds. Treasury yields recovered briefly and then reversed as the move raised fresh doubts about long-term US debt sustainability.
In geopolitics, President Donald Trump threatened to bomb Oman if the country interfered with America's Strait of Hormuz blockade. Israel's military attacked Lebanon, which could dent prospects for a lasting peace deal in the region.
The US and Canada failed to reach a trade deal and the US imposed new 50% tariffs on various Canadian goods. Canada's Prime Minister Mark Carney said the country would retaliate “dollar for dollar” against the new US duties. Meanwhile, China agreed to cut nearly all tariffs on Swiss exports and update the terms of their 2014 trade deal.
Physical implementation of artificial intelligence (AI) is emerging as the next phase of the AI boom. Shares of a Chinese robotics company named Unitree jumped 460% in its debut listing. A robot competing in the 2026 Beijing humanoid robotics games beat a running record set by Usain Bolt, the fastest man alive.
Quote of the week
When asked about rising bond yields, Trump said the US military could play a role. “The ultimate intervention is the military and if we have to use that one, we will.”
Key data
US retail activity was mixed, with monthly sales falling 0.6% in July. Walmart reported its weakest same-store sales growth since 2020. In contrast, US manufacturing is booming. Both the New York Empire State and Philadelphia Fed manufacturing indices recorded their highest readings in nearly half a decade.
In Europe, flash purchasing managers' indices came in stronger than expected, with German manufacturing output hitting its highest level in four years.
Japan's economy grew 1.1% in the second quarter, short of market expectations.
China’s latest economic data was worse than expected. Second-quarter GDP growth fell below target at 4.3%, retail sales rose by just 0.6%, fixed asset investment fell 6.7% during the first seven months of 2026 and industrial output fell short of forecasts at 4.5% y/y. Alibaba raised HKD 80 bn to fund its AI ambitions. The company's latest AI model, Qwen, surpassed 3 bn global downloads over the last six months.
