iiinova — where your digital self keeps evolving

“The Orange Plague” a gold-encrusted statue of a naked President Trump IN THE EUROPEAN PARLIAMENT!

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Surprised no one blinked at the header image of FTAV’s further reading today. www.ft.com/content/2a7c...

Prices; currencies; hacking; oil; Le chonk; antibiotics; afterlife

FTAV’s further reading

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Am afraid it's silent on this matter. It does suggest, though, that if you'd previously had been worrying about a US Treasury doom-loop of automated selling coming from US MBS holders convexity hedging, you can maybe chill a bit.

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It was either that or another thousand words. I think the audience will have appreciated my choice.

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Does the doom loop carry on forever? NO! If I took out a mortgage at 2.75% I'm pretty much as likely to refinance at 7% as at 7.25%. My 2.75% mortgage will look like a normalish bond. And, at a whole-market level, it looks like convexity is pretty much done being negative. 🥳

Chart showing the index-level convexity of an index of current 10yr US Treasuries (staying fairly close to 1) and an index of fixed rate agency MBS (spending their whole life negative, aside from a short period after the monster 2022 bond sell-off, and again, now.

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But this means that the folks handing out mortgages are short prepayment risk, aka short bond calls. And this means that effective interest rate risk moves in the opposite way to how it should, if it was a normal bond.

Two panel grid showing bond yields (blue) and modified duration (red) for an index of current 10yr US Treasury bonds (left) and fixed rated agency mortgage backed securities (right).

In the left hand panel, rising yields (blue) mechanically reduces interest rate risk (red).

But in the right hand panel, when bond yields rise (blue), their holders find that their interest rate risk (red) rises too.

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Unlike many other countries, folks in the US can ditch their long-term fixed rate mortgage rate if a better rate comes along without too much cost

When 30yr mortgage borrowing costs (red line) fall, a lot of existing mortgagors realise they could save $$$s if they ditched their old (higher) fixed rate and bagged a new (lower) fixed rate. So they refinance (blue line is an index of refinancing applications).

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🚨 I wrote a post about how US MBS are a (longstanding) part of the US Treasury doom loop machine. www.ft.com/content/a04e...

How US mortgage bonds can trigger a ‘vicious loop’ for Treasury yields

One little cog in the bond market’s feedback machine

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French govt bond shenanigan candidates, via Unhedged www.ft.com/content/16df...

Neat tricks to help French bonds

And why they won’t work

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Toby Nangle @tobyn.bsky.social · 06/10/2026

Better not show this to the President, via the NY Fed libertystreeteconomics.newyorkfed.org/2026/10/how-...

Chart titled "Tariffs raised consumer goods price inflation"

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Toby Nangle @tobyn.bsky.social · 06/10/2026

I think we can all put our heads together to ask some tough questions to Ian and Robin :)

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Toby Nangle @tobyn.bsky.social · 06/10/2026

Really interesting read — thank you.

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Toby Nangle @tobyn.bsky.social · 04/10/2026

My winning Alphaville 2022 meme-of-the-year (back when I was but a reader) could go next to it. www.ft.com/content/8974...

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Toby Nangle @tobyn.bsky.social · 04/10/2026

Cool chart mapping: 1) researcher's understanding of AI substitutability (y-axis); 2) need to have a human present to take responsibility (x-axis), where size of bubble = number of US jobs cepr.org/index%2Ephp/...

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Toby Nangle @tobyn.bsky.social · 04/10/2026

Is that @lucyfisher.ft.com covering Farage's byelection in that third panel?

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Here’s why I think @robarmstrong.bsky.social is right bsky.app/profile/toby...

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Podcast Episode · Unhedged · 1 October · 20min

Is hyperscaler US bond issuance behind the rise in UST yields? I’m #TeamRob podcasts.apple.com/gb/podcast/u...

podcasts.apple.com

Hyperscale my debt!

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And after QTing I went away and actually looked in detail at what had been going on and wrote up my findings here bsky.app/profile/toby...

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Yeah ok, but I posted a link to a story explaining the context, and QT’d Chris’s post that contained a bit of description, as well as another story.

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Ironically (perhaps in an Alanis Morisette sort of way), PSKY is changing to SKYD next week. Perhaps in recognition of what their spreads have just done.

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And looking at the amount of risk premia attached to the bonds of each company, it does look like there's a bit of an Ellison family discount going on.

Scatter chart showing the spread over govt bonds (y-axis) of every bond in the ICE BofA BBB US corporate bond index, by maturity date (x-axis). Size of each bubble is the size of the bond.

Pink bubbles are Oracle.
Blue bubbles are Paramount Skydance.
Grey bubbles are everything else.

If you head to the post, it's all interactive and you can see the numbers and names behind each bubble.

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As @chriswhittall.bsky.social notes, Paramount 5yr CDS has gone bonkers.

Chart showing the 5yr CDS for Oracle (in pink), Paramount (in cyan) and also BBB spreads over government bonds (dark blue).

(BBB spreads are the ICE BofA BBB corporate bond index option adjusted spreads)

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Key quote here from head of media and cable at research firm CreditSights.

“The current credit metrics for this company are not commensurate with the rating,” Martin said. “The rating is based on the expectation that they will execute the savings, grow their profitability and repay debt over the next few years.”

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Ooof. As background, here's Michelle Chan's coverage of the monster bond issuance from yesterday www.ft.com/content/188a...

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(My tl;dl precis of his risks: 1. Paperclipmaxxing; 2. Musk of someone king of the world; 3. Terrorists use AI super-agent for science 4. K-shaped economy, where all richer but AI systems much much richer)

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Tony Tassell @tonytassell.bsky.social · 02/10/2026

Thought this was a good listen. Though think #4 of his existential AI risks to humanity might draw a bit of a wry smile from some.

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Reposted by Toby Nangle

Please listen and share this short podcast on the risks to humanity from AI with @tobyord.bsky.social and @gideonrachman.bsky.social. Ord makes a persuasive, very clear case in outlining the huge scale of the challenge to contain these risks. It is worth your time www.ft.com/content/e6f7...

Could AI really end humanity?

Researcher Toby Ord discusses rising anxiety about AI’s existential risks

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It’s funny but I call bullshit. Eg, Genesis outselling Rolling Stones?

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The BIS call the parallels with Nortel and Lucent in the late 1990s "instructive". 👀

Chart showing the steep rise and dramatic collapse of Nortel Networks' market cap around the dotcom boom/bust.

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Not every investment into the 1,246 AI firms they tracked came from another AI firm. And not every one of those AI-to-AI investments was a circular financing deal. But we're still talking >1/4 of investment volumes classified as circular financing.

Doughnut chart showing 25.6% of AI investments 2021-2025 (in red) classified by the BIS as being circular financing deals. A further 29.6% of investment (grey) is AI firms investing in other AI firms. The remaining 44.8% of investment comes from everyone else.

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🚨It was only a matter of time before the good people of the BIS got around to looking at AI circular financing www.ft.com/content/8787...

Is circular financing in AI a problem?

Only if the wheel stops spinning

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Find someone to love you like Paul Marshall loves burning cash on GB News pressgazette.co.uk/media_busine...

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Did make me wonder about the incidence of fraud across US banks through history. If 11% of the supposed innocent banks that didn't deserve a run went under because, subjected to financial stress, an unconnected enterprise-ending fraud is exposed...

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Thx Win. I was really surprised by the vanishingly small number of 'non-fundamental' bank runs they catalogued. And speaking to Verner I got the impression that pretty much all of the six that didn't survive them were massive frauds.

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We've reverted to pre-Whatever-It-Takes spread levels

10yr France yield minus 10yr Germany govt bond yield.

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🚨 French bond spreads. Eek www.ft.com/content/e7c0...

Bond investors 💔 OATs

Sacré bleu

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UN Sec-Gen doesn't mince his words on Big Tech either:

"Artificial intelligence must be shaped by humanity, with humanity, and for all humanity.

And as we confront the challenges ahead, let us not retreat from two fundamental principles.

Let us say with one voice:

Children must never become the test subjects for unregulated systems.

And let us resolve that life-and-death decisions must never be surrendered to machines.

Killer robots must have no place in our future."

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UN Sec-Gen António Guterres' speech to the General Assembly doesn't mince his words on Big Oil www.un.org/sg/en/conten...

António Guterres, UN Secretary-General, 22nd Sept 2026 speech:

"For decades, Big Oil has treated the atmosphere as an open sewer – and cashed in on the consequences.

Since Russia’s invasion of Ukraine, five major Western oil companies have pocketed nearly half a trillion dollars in profits.

Compare that with just 34 billion dollars in international public adaptation finance for developing countries in the latest year reported.

Meanwhile, everyday people are paying more for energy, food and insurance.

We have seen this kind of abuse of power before.

When the harms of Big Tobacco became undeniable – governments acted.

The climate crisis demands the same determination.

Those who polluted the most – and profited the most – must do far more to repair the damage they caused.

Polluters must pay. "

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IDK, there are 2665 securities that the BoE recognises as Level B eligible collateral, which I think they can post for index-linked repo — though with haircuts of 20-32%. www.bankofengland.co.uk/markets/elig... www.bankofengland.co.uk/-/media/boe/...

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