Blain’s Morning Porridge August 24th, 2026“Change before you have to…”This week is going to be… “interesting”. Confidence in the US financial markets and system is under pressure. The US owes more than $40 trillion. Bessent’s intervention in bond markets has backfired, the market is waiting to judge new Fed Head Kevin Warsh, and Trump has kicked off a new trade war with Canada. The USA’s Virtuous Sovereign Trinity of the Dollar, the Treasury Market, and Political Competency looks well-wobbly. Meanwhile, the latest documentary on Boeing shows how the myth of US exceptionalism is under pressure.Key Takeaways:This could become a confidence and liquidity crisis if markets continue to pressure Treasuries.Bessent’s attempt to manipulate the US yield curve is seen as political interference in the Fed’s role – and has backfired.QE worked in 2010-2022 because inflation wasn’t a threat, debt quantum’s were manageable, there was consensus, and the dollar’s dominance was not in question. Today, the situation is very different. What happens to market confidence if the Fed Put no longer works?Kevin Warsh’s credibility is the main question to be answered at Jackson Hole. Will he try to please the president, equivocate, or please markets? He could trigger a Treasury breakout. A bond market sell-off is manageable – but only if the Fed retains credibility!A treasury crisis could impact all US assets. The new documentary on Boeing “Freefall”, is a case study on how the financialisation of US firms enabled by the depth of US capital markets may be about to unravel.This is shaping up to be a very dangerous week for markets and the US financial system.

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