Guests: Gordon Liao (Chief Economist, Circle), Ram Ahluwalia (Co-Founder & CEO, Lumida Wealth), Chris Perkins (Managing Partner, CoinFund)

Host: Austin Campbell

Original Title: The Fed, China, and CLARITY + Coinbase Eats USDH

Podcast Source: Unchained

Air Date: May 19, 2026

Edit Note

In this episode, Circle’s Chief Economist Gordon Liao offers a systematic breakdown of the market structural logic behind USDH being superseded by USDC. USDC balance on Hyperliquid has doubled over the past year, with 90% of reserve yield flowing back to Hyperliquid for HYPE buybacks. Coinbase serves as the treasury deployment partner, while Circle handles technical integration and infrastructure operations on Hyperliquid and stakes 500,000 HYPE tokens to secure validator status.

Gordon also deconstructs long-dated U.S. Treasury yields. The current 30-year yield breaching 5% is primarily driven by term premium, while stablecoins are quietly emerging as marginal buyers of Treasuries. In Q1 2026 alone, USDC’s on-chain settlement volume reached $21 trillion. The concentrated accumulation of short-term Treasuries by stablecoins effectively compresses the overall weighted duration of U.S. debt, potentially providing countervailing support to long-end yields.

Additionally, the discussion highlights key divergences on the CLARITY Act’s bottlenecks and post-OpenAI lawsuit debates about where AI value will ultimately be captured.

Key Quotes

USDH Superseded by USDC

Multifaceted Nature of Stablecoins

OpenAI Case and AI Value Capture

On the CLARITY Act

Long-Dated Treasuries and Interest Rates

Coinbase and Circle Team Up to Take Over USDH

Austin Campbell (Host): Hello everyone, welcome to Bits + Bips, where we explore how crypto and macro collide at the basis point level. I’m your host, Austin Campbell. Today’s guests include Ram Ahluwalia, Co-Founder & CEO of Lumida Wealth, Chris Perkins, Managing Partner at CoinFund, and Gordon Liao, Chief Economist at Circle. There’s a lot going on in interest rate markets and news today—I’m especially eager to hear Gordon’s perspective.

Let’s start with Circle. Coinbase and Circle have essentially consumed USDH. USDC will be crowned as Hyperliquid’s (on-chain perpetual DEX) aligned quote asset. Native Markets, which won the governance contest eight months ago, has now been acquired by Coinbase. USDH holders will redeem into USDC during the migration period. Coinbase will become the official treasury custodian and deployment partner for USDC on Hyperliquid, while Circle manages technical integration and operational infrastructure for USDC on Hyperliquid and stakes 500,000 HYPE tokens to achieve validator status. 90% of reserve yield will flow back to Hyperliquid, likely used via an aid fund for HYPE buybacks.

Roughly speaking, there are currently ~$5 billion in USDC on Hyperliquid. At under 4% yield, that’s nearly $200 million annualized. Most of this will flow back to Hyperliquid—Coinbase takes a cut, while Circle secures a new USDC deployment foothold, continuing to close the gap with Tether in scale.

The bullish case hinges on deeper order books, lower swap slippage, faster deposits/withdrawals, and superior market maker support. HYPE is tied to platform fees, staking, and Builder activities. Bitwise is also pursuing a spot HYPE ETF. Bears like ZachXBT worry that if Hyperliquid’s core collateral, quote asset, and liquidity increasingly rely on USDC, the entire system outsources its critical control points to Circle/Coinbase and regulatory directives. Governance issues around Native Markets remain a concern. Chris, as an investor in this space, what’s your take?

Chris Perkins: I see this as one of several moves coming down the pipeline—key term: “net interest income.” If you step back from exchange models traditionally: you earn transaction fees, a small cut per trade; typically, clearing isn’t profitable, though it’s now a new revenue stream in our ecosystem, sometimes generating data-driven margins. But the real money comes from net interest income.

In traditional finance, clients deposit dollars with you as collateral; you send those dollars to clearinghouses, which invest them and retain most of the return, giving you a small slice. That’s your net spread—the fundamental component of any exchange business model. Many decentralized applications previously ignored this, handing away this lucrative revenue stream. Now they’re waking up and reclaiming it.

I can tell you: anywhere TVL can be captured—exchanges, apps, prediction markets—will find ways to monetize floating rates. Why give it to third parties?

If you're viewing it from the exchange lens, this is bullish: Hyperliquid surged after the announcement because this circle is now closed (double entendre: Circle). You’ve solved net interest income, returning value directly to token holders. If you're on the Circle/Coinbase side, you’re also winning—details are in the terms, such as the duration of the peg or how often rates are renegotiated. I don’t know if Gordon can disclose specifics, but you’re gaining adoption of a widely accepted stablecoin. USDC is fungible, so the more you circulate it, the more likely end users are to accept it as a payment medium.

So USDC wins too. Perhaps future adjustments to economic terms will follow. Hyperliquid wins big by securing net interest income; Circle gains broader adoption, scale, wider distribution, and the incremental utility it seeks. I see this as a win-win.

Austin Campbell: Gordon, let me throw you a curveball. I know Circle well myself. USDC has many facets in today’s market. From a market structure standpoint, Americans traditionally view money as layered—you use different forms for coffee and derivatives settlement. But now we’re seeing USDC used across multiple functions, with rising substitutability. From Circle’s vantage point, how do you interpret this? And through your broader economics background, how does this reshape market structure?

Gordon Liao: A few observations. First, we’re witnessing the maturation of the underlying infrastructure. Hyperliquid is today’s dominant on-chain perpetuals platform, with significant scale growth. USDC balance on the platform has roughly doubled year-over-year.

The governance vote nine months ago did select a different reference asset. But as the platform matures and engages more with traditional institutions, using high-quality, institutional-grade collateral becomes essential. Choosing USDC reflects recognition of its underlying security and 1:1 reserve backing.

As Chris said, this is a win-win—and a liquidity supernova event. As the leading on-chain perpetuals platform, its collateral choices ripple across the entire on-chain economy. This is a major liquidity event encouraging broader use of USDC and associated infrastructure.

We deployed USDC to Hyperliquid last September, alongside CCTP (cross-chain transfer protocol). So it’s been present for some time, but this is a strong “reconfirmation” event.

On whether stablecoins are means of exchange or store of value—we see them as both simultaneously. In some contexts, they serve as exchange media; in others, they act as capital liquidity and collateral liquidity vehicles. As systems scale and institutionalization deepens, the latter role grows increasingly important.

Similar trends are visible in settlement volumes. Our recent earnings report disclosed Q1 USDC on-chain settlement volume at $21 trillion. This reflects infrastructure expansion and improving liquidity across the largest platforms—centralized or decentralized.

Austin Campbell: Following that thread, USDC’s circulation is highly correlated with Coinbase. Coinbase built many products from the ground up on USDC, including debit cards, credit card payments, and enterprise payments. Now we’re using it as core collateral for exchanges like Hyperliquid. Ram, from a market perspective, does this make you more bullish on Coinbase and Circle stocks—or more bearish?

Ram Ahluwalia: It’s a win for everyone, especially Hyperliquid. For Coinbase and Circle, they’ve successfully neutralized a rising competitor. Coinbase as the collateral custodian embedded at a strategic node in new infrastructure is a powerful move.

For Hyperliquid, keeping 90% of revenue is a reward for years of execution. We discussed Hyperliquid just three or four weeks ago—it’s one of the assets you’d want to hold in this cycle. Coinbase acted preemptively, recognizing Hyperliquid’s rise as the core of decentralized trading. Circle secured substantial recurring net interest income. So this is a universal win, with Hyperliquid benefiting most.

This circles back to our earlier discussion: distribution ultimately drives most of the returns in this system. Gordon, you’ve also noted Hyperliquid as the emerging dominant perp DEX in crypto. The convergence of all these players fundamentally recognizes the centrality of distribution and user base—a theme that will keep resurfacing when assessing winners and losers.

OpenAI Lawsuit

Austin Campbell: Speaking of users and winners, Elon Musk lost today, Sam Altman won—at least in the first round. The Oakland federal jury unanimously dismissed all of Musk’s claims in under two hours. The core ruling centered on the three-year statute of limitations: the jury concluded Musk knew OpenAI transitioned to a for-profit model in 2021, yet waited until February 2024 to sue.

Musk originally sought $134 billion in “unjust enrichment,” plus removal of Altman and Brockman from leadership, citing the 2025 profit reorganization. However, substantive issues—including alleged breach of charitable trust, unjust enrichment—were not adjudicated. Musk’s team has announced plans to appeal. Wired commented that both sides portrayed each other as self-serving in court, painting neither in a favorable light. Subsequent interpretations suggest OpenAI may now be viable for IPO in the near term.

Several reactions on X are worth reading. Structural skeptics argue this is a legal victory for OpenAI, but the deeper political and institutional problem remains untouched: an organization built on public legitimacy as “nonprofit, human-first” has become one of the world’s most valuable commercial platforms. What does that mean? News24 stated: a nonprofit machine founded to benefit humanity forcibly transformed into a closed, for-profit entity backed by Microsoft. The trial indeed revealed broken promises around openness and safety. Chris, what’s your take?

Chris Perkins: The statute of limitations clearly expired—that’s straightforward. I don’t know how Musk’s lawyers will appeal, but they’re smart—they’ll figure something out.

At this juncture, Ram usually says something negative about OpenAI, calling it an overblown issue. Before he speaks, the bigger picture in crypto is that due to four years of regulatory pressure, many funds are structured as nonprofits with Labs. I hope for a clear precedent to clarify the relationship between foundations and Labs. Right now, in many protocols, who’s responsible for what, and who’s who, is confusing.

I’m not saying foundations are useless. They absolutely advance nonprofit ideals—for example, cryptographic research for Ethereum. But many foundations exist partly as shields against aggressive regulators. So this case will have far-reaching implications for crypto. Sam is also increasingly involved in this ecosystem.

Ram Ahluwalia: Chris, you’ve just handed me the ball. I didn’t expect this case to shake things up—so nothing happened, and yes, it was overblown.

There are heroes and villains in tech. I place many in the hero camp, some in the villain camp—but that doesn’t mean they lack value. Sam’s issue is his history of signing illegal contracts. He even pulled a similar stunt with Microsoft—signed an Amazon deal, then renegotiated the Microsoft contract. Microsoft got extremely favorable terms, enabling OpenAI to secure needed capital. Of course, Microsoft wants to recoup tenfold returns via capital provided to OpenAI.

Sam strikes me as a villain. He was ousted by a board he appointed himself, inadvertently seeding his main competitor (via team departures during his dismissal), and had an employee die under suspicious circumstances during his tenure.

Chris Perkins: That’s quite extreme.

Ram Ahluwalia: No, no—this is a factual statement. “An employee died under suspicious circumstances”—that’s accurate. Those circumstances were indeed suspicious.

In short, this space has heroes and villains. I place him in the villain bucket.

Austin Campbell: Gordon, any thoughts?

Gordon Liao: Broadly speaking, competition in AI is fierce at every layer. What’s playing out in court is just one facet of that. But if you think about us—those of us bridging blockchain and AI—where are the opportunities? I believe it’s in building rails for tomorrow—specifically for Agents and AI. This is exactly what Circle has been doing: launching our agent technology stack and ARC, our “economic operating system.” I believe these will generate enduring network effects, comparable to USDC’s. So even if competition intensifies at the foundational model layer, there are still vast opportunities elsewhere from a business perspective.

Chris Perkins: Competition is good. We need more. No one is perfect—I’m not either. This is a brutal race. I hope they continue innovating, creating value, and that free markets prevail.

Austin Campbell: Let me push further. Today we’re fighting fiercely in court over OpenAI, because private markets see it as one of the most valuable foundational model companies. But let me stress-test: long-term, could this trial be remembered as a minor incident? The reason: if distribution is where value ultimately accumulates, will value stay within OpenAI, Anthropic, and similar firms—or will it reside with platforms that deliver models to users and charge tolls?

Ram Ahluwalia: Definitely the latter. The LLM layer captures almost no value. These AI Labs spend hundreds of billions offering free services—essentially public utilities. But Microsoft owns OpenAI’s IP. Six years from now, they can dispose of shares, but the IP is permanent. They can use it for anything—even deploy it on the internet. I’m not saying they will, but LLM value lies in model weights—the IP. That ends up in a direct competitor’s hands.

So I support AI Labs raising more capital to invest in humanity’s future, but their business models lack value capture. Meta has taken “Team A” (Ram referencing the 80s TV shows *A-Team* and *Airwolf*). Their new models are strong, and they’re investing heavily in NVIDIA GPUs. So the race is still early.

Anthropic is in a leading position with rapid revenue growth. I recently saw Michael Dell reveal that Dell signed 1,000 new enterprise customers. We’ve moved beyond a world of only hyperscale data centers and AI Labs pouring GPUs into training. We’re entering genuine commercial deployment—and still early stages.

Who controls the end-user delivers the greatest value—primarily landing in application layers, cloud services, and AI implementation providers like Accenture.

Chris Perkins: I agree with the distribution logic, but it’s a barbell. The other end is energy. Whoever gets near-free energy and cheap compute wins. Elon has an advantage here. The science of harvesting near-free energy in space is not easy, but if anyone can do it, it’s someone who globally launches things into space. That’s Elon’s unfair advantage at the stack’s lowest layer. But front-end, distribution rules.

Ram Ahluwalia: We haven’t seen Apple’s real plan yet. How many times has Apple descended from the sky late in the game to dominate? Recent internal turbulence makes this company worth watching.

Austin Campbell: I’d say Apple has an interesting story here. While its “Mag 7” peers are spending capex on model training, Apple seems to say: we’re a vertically integrated hardware company from end to end—from iPhone and MacBook to servers and Mac Studio. We’ll be the endpoint for model distribution, and we’ll collect tolls. Just look at what they’re doing in App Store and ecosystem bundling.

Incidentally, Chris, this brings us back to your cherished identity question: Apple is one of the few major tech companies that actually does “decent” privacy protection, making it more trustworthy on these issues. So my current divide is: do you build your own AI, or deploy someone else’s AI and extract tolls? The latter is the distributor.

Gordon, you’re in a company shaping “money” itself, and you’ve observed many cases of Agentic Commerce and financial firms entangled with AI. How does this relate to modernization of the U.S. financial system and adoption of new products? Reminder to U.S. listeners: Asia already had 24/7 real-time gross settlement systems from the late 90s to early 2000s. We’re already two decades behind. Could this accelerate the entire financial-economic update—not just in AI?

Gordon Liao: Absolutely. Most transactions are still human-mediated, but many forecasts predict machine-to-machine and machine-initiated payments will dominate. Today’s large LLM companies are massive and pivotal, but models evolve rapidly—even open-source ones aren’t far behind. So value will increasingly flow toward commoditized goods, hardware, and the rails where Agentic Commerce occurs.

For instance, micropayments—we recently launched a micropayment protocol, a marketplace where Agents can browse, discover each other, and use optimal tools, even without human presence, enabling fully automated M2M commerce. All of this runs on blockchain rails. We’ve recently leveraged ARC, a massive growth area tightly integrated with finance. We’ll touch on this again when discussing CLARITY—it’s orthogonal to balance-sheet intermediaries and closely related to activity-based finance.

Austin Campbell: Let me offer a counterpoint. I often hear that agent payments will run on blockchain rails—but I also think they might use traditional rails. An Agent with a credit card is easy. So the winner will be those who can enable seamless cross-system flows. That’s why I focus on combinations like Coinbase + Circle, or Fidelity’s product line—already with money market funds and cash management products, now launching stablecoins.

Agents seem less loyal than human consumers, but they excel at optimizing across different flows. Not all flows use the same framework—sometimes chain-based payments, sometimes card swipes, sometimes bank accounts. I suspect the winners in Agentic Commerce will be those who seamlessly integrate across these channels. Theoretically, pure on-chain or pure off-chain entities might lose to hybrid integrators spanning both worlds.

CLARITY Act: Reaching Hillary’s Step

Austin Campbell: The Senate Banking Committee passed the Digital Asset Market Clarity Act 15–9 along party lines, sending it to full Senate floor debate. A 60-vote supermajority is required for formal consideration. One unresolved issue remains: will additional amendments be introduced after passage to the full chamber?

The bill’s core includes decentralization testing, SEC-CFTC jurisdictional division, and delineation of which tokens fall under which agency. Everyone agrees the bill is imperfect—but at least it’s acceptable.

Let me highlight two points. First, the dispute over stablecoin yield: consumers, retail users, and the crypto industry call it “by design,” while banking lobbyists still label it a “loophole.” Senators Tillis and Alsobrooks reached a compromise: strictly passive yield is banned, but “activity-based rewards” are permitted. The American Bankers Association is unhappy, but other stakeholders are satisfied. Senators have stated they won’t reopen negotiations. Let’s discuss: assuming Tillis and Alsobrooks are sincere and won’t revisit terms, what happens if the bill passes as-is?

Gordon Liao: Let me kick it off. Money inherently has multiple attributes: it’s a settlement tool, a store of value, and a unit of account. In a sense, it separates the functions of value storage, settlement, and accounting.

This also echoes a broader trend in financial intermediation. Traditional intermediaries are deeply reliant on balance sheets, hence the banking regulations centered on stress-testing balance sheets. In that world, expanding balance sheet size is key, paired with corresponding regulation. But in the evolution of on-chain finance, much of it is activity-based—not measured by balance sheet size, but by the set of activities mediated by smart contracts.

This compromise precisely captures the boundary between old and new—between the traditional, balance-sheet-heavy intermediary world and the new, smart-contract and agent-driven intermediary world. Players focused on activity-based rewards, services, and novel intermediary forms stand to gain significantly.

Chris Perkins: First, kudos to Senator Tim Scott and Senator Loomis for excellent leadership from the Republican side. Special mention to Senators Gallego and Alsobrooks. Gallego is a Marine Corps veteran—I served in Ramadi when he fought in Haditha. This guy has courage—he brought bipartisan color to the committee stage. Fantastic.

We’re now approaching Hillary’s Step (the final, steep climb before Everest’s summit). Committee seat issues remain, ethical concerns persist, and the ethics hurdle will be extremely tough. Then, the banking lobby is dissatisfied. The banking lobby is still invoking national security today—likely because they’re unhappy with other clauses. Approaching the finish line will be difficult.

But I still believe the bill will pass. Let me ask you all: we’ve had differing views before. What’s your take?

Ram Ahluwalia: I believe it will barely pass. What did Trump do? He tweeted about the CLARITY Act, saying he’d put his chips on it. With midterm elections approaching, blocking it serves no purpose. I still think it will barely pass.

Austin Campbell: I’m more skeptical than both of you. Simply reaching the full Senate is a positive signal—regardless of prior odds, the probability should now be upgraded. But Chris, no one has given me a truly credible solution to the “ethical issue.” I see two possible paths: one is short-term beneficial but long-term disastrous—passing CLARITY purely along partisan lines in both House and Senate. That’s possible under current frameworks. But if passed solely by Republicans, it’ll likely be dismantled the moment the opposition takes power—like the Affordable Care Act. Forcing transformative legislation through a one-sided partisan vote rarely succeeds in U.S. legislative history.

The other path is the bill crashing on the rocks of the ethical issue. If it dies, it dies there. Every other issue—banking disputes over yield—has solutions. Many arguments boil down to industry-specific lobbying, harmful to average consumers, the U.S. economy, and increasingly interested national security agencies. The ethical issue remains my lingering doubt after talking to both sides. So I’m holding back.

Ram Ahluwalia: Austin, what’s the specific sticking point on ethics?

Austin Campbell: The core is whether Democrats will vote for a bill that doesn’t force Trump’s family to divest interests in World Liberty Financial, meme coins, etc.? And whether Republicans will send a bill forcing the president to do so? That’s the break point. I don’t see a clean solution. But Chris is right—once it reaches the full Senate, things get strange. It has non-zero probability of advancing—perhaps some unrelated compromise emerges, like exchanging other favors.

Ram Ahluwalia: Differentiating between pay-in-interest and “activity” is a smart design. I generally like the principle. But how many edge cases can activity-based regulation accommodate?

Chris Perkins: We now live in the “post-Chevron deference” era (after the Supreme Court overturned Chevron doctrine—i.e., courts no longer automatically defer to regulatory interpretations). Previously, “if rules aren’t clear, regulators decide”—regulators could fill gaps in ambiguous text. Now, legislation must be stricter and more prescriptive, resulting in worse-written bills. Any disputes now go to court. In a way, we do need Chevron gone—but it had benefits. I’m not saying bring it back, just noting complexity has increased.

Austin Campbell: Let me add another angle: this is fundamentally a Gordian knot rooted in structural flaws in U.S. financial regulation. To stop money market funds from paying interest, you’d need to rewrite the 1940 Investment Company Act—legally, they’re required to distribute returns to clients, not reinvest in compounding. As long as we have tokenized securities on one side and stablecoins with reserves resembling them on the other, this door can’t be closed. The issue is form, not substance. Otherwise, you’d need to rewrite the Banking Act and the 1940 Act. I don’t believe Congress has the appetite now.

They couldn’t even confirm Warsh—just one person in one chair for one job. Expecting them to rewrite the foundation of U.S. securities regulation? Impossible. So from the start, I see the banking lobby’s fight as Quixotic—they’re essentially giving a gift to asset managers.

Chris Perkins: Senator Gillibrand is now one of the most watchable figures. She supports crypto, deeply involved since the earliest legislative stages, but her stance on ethics is rock-solid. Anyone who can reach an agreement with her would have major influence.

Bond Vigilantes vs. New Fed Chair Warsh

Austin Campbell: Warsh is the most closely divided Federal Reserve Chair in modern history. The first FOMC meeting is in mid-June, but shortly after confirmation, a $25 billion 30-year Treasury auction broke 5%. The 30-year yield hit 5.12% intraday—first time above 5% since the 2008 financial crisis. The 10-year is at 4.59%, the 2-year at 4.08%. CME FedWatch shows a 50% chance of rate hikes later this year—completely reversing the previous narrative of cuts. Of course, interpretation varies—this isn’t a linear hike path.

Ed Yardeni, who coined “bond vigilantes,” says they’re now setting policy—Fed may be forced to hike in July. WisdomTree’s Vincent Ahn says Warsh wants to preserve the option to cut rates immediately, but the bond market just removed that option from the table. Morgan Stanley predicts rate cuts won’t happen until 2027. BCA’s Ryan Swift warns that if Warsh goes dovish amid this bloodbath, inflation expectations could unanchor, and the Fed would lose control over long-end yields.

Some see this as positive. Reuters Breakingviews’ Phil Blacanto argues that evaporating rate-cut expectations can constrain an over-interventionist Fed—potentially a good thing. But interest rates are complex and often misread in traditional markets. Gordon, as an economist, market observer, and former Fed insider—what is the market really signaling now?

Gordon Liao: Let me answer from context. I worked at the Federal Reserve Board in Washington. When you see rate movements, the first question is: is it term premium or expected short rates driving the change?

Using the classic ACM model, most of the 30-year yield increase is driven by term premium. Term premium is currently ~80 bps—high compared to negative levels two years ago. Term premium largely reflects supply-demand dynamics, while expected short rates reflect market views on whether the Fed will hike.

Since the yield rise is mainly due to term premium, it signals supply-demand factors. On demand: fiscal imbalances and ongoing fiscal expansion; declining confidence in the Fed’s ability to control inflation long-term; and possibly weakening foreign demand—international balance changes have been significant over the past year.

On supply: incoming Fed Chair Warsh is a supporter of reducing the Fed’s balance sheet—meaning reverse QE. This coincides with the upward pressure on long-end yields.

Another narrative: stablecoins are marginal buyers of Treasuries. I believe this claim carries more weight than commonly credited. Not just because stablecoin volume is growing, but due to maturity structure. Stablecoins hold very short-duration assets, freeing up room for Treasury issuance at shorter maturities.

If you perform duration-weighted calculations, this actually implies a significant shift in dollar duration—reducing long-duration dollar supply in the market—which could paradoxically ease current upward yield pressure. These are interconnected. Don’t treat rates as a single number—break them into term premium and expected short rates, then consider balance sheet dynamics: expected Fed balance sheet changes and private sector demand.

Austin Campbell: Your point just now is often overlooked: it’s not just who buys Treasuries, but more granularly—what maturity? Under the GENIUS Act, stablecoins prefer short-term Treasuries. Even if not preferred, they can repo using Treasuries as collateral, but long-dated Treasuries face higher haircuts—creating a maturity preference.

Meanwhile, the largest buyers of 30-year long-end bonds are insurers and sovereign funds. Their preferences are shifting: sovereign funds are reducing long-term holdings—possibly influenced by geopolitical considerations; insurers are tied to demographic curves in their service countries. The baby boomer generation is fading out, and the next dominant cohort is millennials—insurance curves are deforming, possibly reducing 30-year demand.

So I’m monitoring term premium. Gordon, you said 80 bps is relatively high recently, but historically still low—peaks reached 150 bps or more. The term premium curve itself is morphing—this piece is often missed. Ram, from an investment perspective, what’s your take on long-end bonds?

Ram Ahluwalia: First, I agree it’s supply-demand driven. Investors are saying: I need more compensation to hedge larger inflation risks. That’s it. They know the Fed isn’t inclined to cut rates, so someone must yield—yielding means rates rise.

You can see inflation resurgence in oil prices affecting memory and gasoline costs. Irony: Warsh’s confirmation vote was so lopsided. Elizabeth Warren’s core test was: will you cut rates? This guy wants to cut, so the vote was more political signaling.

Overall, I expect rates are topping out. If so, rate-sensitive sectors that have been crushed—like insurance—could rebound. Insurance is a balance-sheet business, similar to banks. Rising rates reduce bond values held, and future liabilities’ discounted value also falls. So they’ve been under pressure.

But the most interesting change over the past couple of days: long-duration, high-free-cash-flow assets have started rebounding. All major indices dropped over 1% yesterday, but long-duration, high-free-cash-flow assets rose. The stock market is telling us: they believe long-end rates will fall. That’s amusing—usually we treat bond markets as part of equities, but this time equities might be right. Warsh’s confirmation feels like a surrender. We’re still missing Ray Dalio’s “end-of-days” viral video—still pending.

Chris Perkins: Let me interject. Long-term, several deflationary pressures will hit the economy: first, AI; second, energy prices—cheap energy investments are enormous. Elon will take it to space, delivering unprecedented computing power. These are long-term deflationary forces. Warsh himself has discussed this, particularly AI.

The issue is short-term. Sovereign funds are selling Treasuries—some due to disengagement, some due to funding needs. Oil prices are high for reasons. This administration differs from any post-war government: first, it’s re-evaluating inflation measurement; second, Bessent-led coordination between Treasury and Fed is unprecedented. I believe this coordination will lead to more holistic policy responses. That doesn’t mean Warsh lacks independence—you can be independent and collaborative. I believe that’s ideal. So I’m optimistic here.

Finally, geopolitics can deteriorate quickly—or improve just as fast. I think it will improve—midterm elections are near, and Americans dislike the current state. It’s hard, but I suspect Trump leans toward de-escalation, not escalation.

Austin Campbell: Time’s up. Thank you all for joining today—perfect timing. Hope listeners gain value from your insights.

Compiled & Translated: DeepTide TechFlow