“I need a big fool.” — This is the first heartfelt words of Federal Reserve Chair Kevin Woor after taking office.

Why? Because he has to do two conflicting things at the same time: shrinking the balance sheet + cutting interest rates.
Shrinking the balance sheet means the Fed stops buying U.S. Treasuries and even sells them. Currently, the Fed has $6.7 trillion in liabilities, of which $4.1 trillion are U.S. Treasuries. When old bonds mature, the Treasury finds new buyers, which is like draining liquidity. Under normal circumstances, shrinking the balance sheet would be accompanied by rate hikes. But he insists on cutting rates. The whole world is confused: Big brother, what exactly are you trying to do?
Strange things are happening simultaneously:
1️⃣ U.S. Treasury yields break through 5.2%, hitting a new high since 2007.
2️⃣ Our “Economic Daily” warns about gold risks.
To explain: the rise in U.S. Treasury yields is because there’s no demand in the secondary market, so bonds are sold at a discount. For example, a bond with a face value of $100 and a 3% interest rate, bought at $95, will mature at $103, making the yield jump to 8%. Now, newly issued 30-year U.S. Treasuries have interest rates above 5.1%. U.S. Treasury yields are the benchmark for all interest rates; when they rise, other assets must follow. Gold, being a non-yielding asset, usually falls in this situation. So, it’s not unreasonable for domestic warnings about gold risks.
U.S. national debt has already reached $39 trillion and is still rising. China, Japan, and Europe are all selling. The Fed is no longer buying and even selling. Yet, in 2026, over $2 trillion in new bonds will be issued… who will buy them?
The whole world is watching: who is that big fool?
Japan? Just spent hundreds of billions of dollars to stabilize the exchange rate, now out of money.
Europe? Fighting in the Middle East, not even sending warships.
Middle Eastern princes? They don’t have that much money either.
Looking around, it might be a new species — stablecoins. They hold $180 billion in U.S. Treasuries, ranking 17th among major bondholders, but all short-term. The hardest bonds to sell now are long-term government bonds, with hundreds of billions issued weekly, and yields soaring because no one is buying.
So why does Woor insist on “shrinking the balance sheet + cutting rates,” which are so contradictory? No choice.
Last year, U.S. interest on Treasuries exceeded $1 trillion, more than military spending. Rates must be cut to bring them down.
Shrinking the balance sheet is also to curb inflation expectations. But the market doesn’t believe it — if it did, things wouldn’t be so chaotic.
Stock markets, bond markets, gold — no one is doing well.
A storm is brewing. We’re just waiting for him to take office and see how this play unfolds.