Double-digit broad money growth in 2026 will overwhelm Treasury Secretary Bessent's Operation Twist intervention, preventing long-term yields from falling and making the policy ineffective.
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Sources argue that broad money growth running at nearly double-digit rates in the first half of 2026 will undermine Treasury Secretary Bessent's Operation Twist strategy, preventing the intended compression of long-end yields and rendering the intervention ineffective.
Monetary aggregates are a leading indicator of inflation expectations and real yield pressures; when money growth accelerates faster than policy interventions can absorb, it typically overwhelms technical operations and forces yields higher as markets price in future inflation risk.
"During the first half of 2026, broad money has been growing at nearly double-digit rates. This fact will torpedo Bessent's interventions, making them pointless."
"During the first half of 2026, broad money has been growing at nearly double-digit rates. This fact will torpedo Bessent's interventions, making them pointless. For Bessent to reach the promised land of lower long-term rates, the Fed must tighten monetary policy and slow the rate of growth in the money supply."