As of Sun 6:45pm ET

← Friday’s Closer · Same Mentor, Two Students Friday’s Closer · Talk Is Cheap. Numbers Matter. →

The Bear Flattener Comes Out of Hibernation in Jackson Hole

Gold, silver, and crypto all dropped Friday, real moves, roughly 3 to 4% each, and that’s genuinely part of this week’s story. But the lead story was the bond market. Fed funds odds for a September hike flipped from 35.4% to 57.5% in a single session. The 2-year Treasury showed the identical shift with more weight behind it, jumping 9 basis points to a one-month high, a large move for that market. Two different instruments, same signal, this was a real, sharp repricing, not a mood shift. This new environment traces back to Fed Chairman Warsh himself, showing he’s genuinely serious about keeping inflation down, and reiterating that the Fed’s preferred inflation gauge, personal consumption expenditures, remains its standard measure, the same gauge that had come in hotter than expected just two days earlier on Wednesday. Here’s the plain version of what that actually means and three ways it could play out from here.

A quiet weekend in price. Funding tells the more interesting story.

Prices barely moved over the weekend, exactly what you’d expect once a real shock has already been absorbed. Bitcoin sits at $78,308.20, up a modest 0.5% since Friday’s close. Gold and silver both eased slightly on price, down 0.5% and 0.9% respectively, while QQQ and SPY are essentially flat.

Funding is where the real story sits. Gold and silver both kept building conviction through the weekend, gold’s 7-day annualized rate climbing to 5.38%, silver’s to 15.84%, the most extreme number we’re tracking. That’s a real signal that leveraged positioning is still leaning into these two even as price stayed calm, worth watching alongside the actual macro chain below.

The interest rate curve is flattening. Here’s what that means.

Here’s the plain version first. The government borrows money for different lengths of time, from 1 month bills to 30 year bonds, and each length carries its own interest rate. Short-term rates rose because Fed Chairman Warsh, in his first Jackson Hole keynote as Fed chair, signaled on Friday that the Fed is leaning toward raising rates, the same event Opener 12 flagged as the one to watch. Long-term rates fell because Treasury Secretary Bessent said he plans to lower them by buying up long-term bonds on the 19th. Those two rates moving toward each other is what “the curve is flattening” means.

Bessent first said he’d buy back long-term bonds on August 19, the dominant story in that Closer and the Opener that followed, and it pushed crypto and metals higher, cheaper long-term borrowing supports both. Last week he explained himself further on CNBC, calling the approach a “Treasury Twist”: Treasury would pay for the buybacks by borrowing short-term instead, not by printing money, since only the Fed can create currency. He didn’t say directly that this meant issuing more short-term bills, the market inferred that from what a “Twist” typically implies.

Fed Chair Kevin Warsh, separately, took a much firmer line on inflation than he’s taken at any point since taking the job. The market’s response to that was immediate and specific, short-term rates shot higher, the same move covered in the lede above. That short-end spike isn’t actually helping Bessent’s goal, tighter short-term policy isn’t something Treasury needs or wants either. What actually connects the two is Warsh showing real seriousness about fighting inflation. This credibility signal helps bring long-term rates down on its own, since lenders demand less compensation for inflation risk once they trust the Fed is on it. Treasury is pressing the long end down directly, the Fed’s credibility is working on it indirectly, and the short end is rising as a separate side effect of that same credibility. The combined result is a flatter curve, whether either of them was aiming for that together or not.

What’s actually happening, and where it goes from here.

The bear flattener has come out of hibernation. Here’s the current state, plus three ways it could evolve from here.

The honest takeaway: Friday was a real shock to gold, silver, and crypto, not proof the underlying case is broken. Watch the long end rate from here, that’s what actually decides whether Friday was a one-time repricing or the start of something worse.

ETH runs hot. BTC stays quiet.

Reading The Pulse. Six things get pulled and scored every check. Open interest against price shows the crowd’s real position, not just its size: both rising means fresh longs are opening, both falling means longs are capitulating, OI rising while price falls means fresh shorts are opening, OI falling while price rises means shorts are covering. Funding’s 1-day trend against its 7-day baseline: running above the 7-day average means the cost of holding longs is rising, running below means that cost is easing. TWAPs shows both the largest order on the board and the fastest one, often different wallets, since the largest shows commitment and the fastest shows who’s actually pressuring price right now. Liquidations already realized are read by which side got forced out, since forced-out longs and forced-out shorts mean opposite things. Liquidations still ahead looks at the nearest-to-forced-out wallets on each side, since the single largest position is often not the closest to getting wiped out. And Tug of War compares the profitable wallets’ positioning to the underwater crowd’s: whichever side the profitable wallets are leaning is the side currently winning.

A genuinely quiet weekend, with two real exceptions in funding.

Three real events this week. Everything else is noise.

Friday was a shock. This week is a scheduled test.

This content is produced by Harmonic for educational purposes. It is strategy education, not investment advice.