Arthur Hayes argued in a new essay, "Safety First," that the recent "safety first" posture promoted by Anthropic, OpenAI, and SpaceX should not be read as a human-welfare-first decision. His claim is that the shift reflects economics: the market still wants AI, but it wants AI at "China prices," or intelligence that is 100 times cheaper than what is available now. In Hayes' framing, that means lower spending on training, more focus on efficiency, and eventually less customer spending on compute. He tied that idea to a broader debt structure built around AI infrastructure. Hayes wrote that three major AI labs are not generating profits, yet their demand for compute underpins more than $1 trillion in investment-grade debt and hundreds of billions of dollars in lower-quality debt. He cited Nick Nameth's analysis to argue that insurers, private equity firms, and affiliated captive reinsurers are carrying much of that risk, with policyholders ultimately exposed. For crypto investors, Hayes said both possible policy responses point in the same direction. If the U.S. government becomes the buyer of last resort for compute, it would print money to support unproductive assets. If it instead rescues insolvent insurers, it would still need to print money to absorb bad AI debt. In both cases, he said, the result is more money supply and a tailwind for Bitcoin.

The Federal Reserve has extended the suspension of reserve-management purchases, or RMP, through mid-October, meaning it will not buy U.S. Treasuries for the purpose of managing banking-system reserves during that period. The move suggests the Fed still sees reserve levels in the banking system as relatively ample, based on its latest announcement. Market views cited in the report say the pause also points to confidence in near-term funding conditions. Secured Overnight Financing Rate, or SOFR, has spent most of the recent period near or below the interest rate paid on reserve balances, while Treasury bill repayments ahead of the quarterly tax deadline have helped ease pressure in funding markets. Wall Street forecasts are split on what comes next. Strategists at Wells Fargo and Bank of America expect the Fed to keep RMP purchases at zero this month and potentially resume them in mid-October if increased Treasury issuance creates added strain in funding markets. Barclays strategist Samuel Earl expects purchases to return at $10 billion in October and rise to $20 billion in November. Citi strategists, by contrast, think the Fed could keep RMP paused for the rest of the year, arguing reserve balances have fallen back to a “slightly ample” level. The report also notes that the RMP pause does not signal a fundamental shift in the Fed’s monetary-policy stance or balance-sheet strategy.

Arthur Hayes argues that the euro-yen exchange rate, rather than a standard U.S. rates indicator, is now the key macro signal for crypto investors. In his latest essay, Hayes says EURJPY could fall from around 185 to 140 or lower by next June, a move he links to stress in France’s sovereign debt and banking system, capital repatriation from Japan, and a policy chain that could force the Federal Reserve to inject more dollar liquidity. His thesis starts with U.S. Treasury Secretary Bessent’s effort to push allied currencies higher against the dollar. Hayes says that trade objective requires private capital to follow official actions, with markets effectively being steered toward selling euros and buying yen. He then ties France’s worsening fiscal position, its negative Target2 shift since 2021, rising OAT yields, and foreign ownership of French bank debt to a broader euro-area fracture scenario he calls a “Schrodinger’s euro.” Hayes also argues that weakness in major French banks such as BNP Paribas could hit the U.S. repo market. Citing OFR money-market data, he says BNP Paribas, Credit Agricole, and Societe Generale account for roughly 20% of repo lending. If those banks pull back, he expects the New York Fed to expand its Reserve Management Purchases program. For crypto, Hayes says that would be a bullish liquidity event, keeping Bitcoin as his core long while maintaining 2026 speculative targets in Ether, Ethena, and Ether.fi.

Arthur Hayes argues that the signal for Bitcoin is not a political slogan from Washington but the level of the US 10-year Treasury yield. In his latest piece, Hayes says both former Treasury Secretary Janet Yellen and current Treasury Secretary Scott Bessent end up choosing liquidity-creating measures when the 10-year yield nears 5%, even if their public messaging differs. He revisits late 2023, when Yellen increased Treasury bill issuance and helped pull money out of the Federal Reserve’s reverse repo facility, and contrasts that with Bessent’s current toolkit, including a larger long-end buyback program and support for broader use of the FIMA facility. Hayes argues that these steps are all aimed at keeping long-term borrowing costs from rising too far. His broader claim is straightforward: when the Treasury and the Fed lean toward yield suppression, dollar liquidity expands, and that tends to lift risk assets, including Bitcoin. Hayes points to the drop in reverse repo balances from about $2.5 trillion to $100 billion by the time Bessent took office on Jan. 20, 2025, and says that liquidity shift helped support both the Nasdaq 100 and Bitcoin. He adds that if Bessent escalates support as market stress builds, Bitcoin could respond in the same direction again.

U.S. long-end Treasury yields surged this week, with the 30-year yield briefly reaching about 5.34%, its highest level since 2007, before easing after Treasury Secretary Bessent announced a larger buyback program for some 10- to 30-year Treasuries. Under the change, the cap for certain individual long-dated buybacks will rise from $2 billion to at least $4 billion between Sept. 9 and Nov. 4. According to Trader Joe’s piece "Beware the Bond," the market move cannot be explained by inflation alone. The argument is that persistent fiscal deficits are still generating more Treasury supply, traditional long-duration buyers such as Japan may not absorb that supply as steadily as before, and AI-related capital spending is creating a wave of competing long-dated credit issuance. In that setting, the more important question is not the size of the buyback itself, but whether the Treasury is starting to respond more directly when long-end yields rise too far or too fast. The article compares the shift to a Treasury version of Operation Twist, while also noting a key distinction: the current buyback program is officially framed as a secondary-market liquidity and cash-management tool, not an explicit attempt to force long-term yields lower.

Arthur Hayes explains Bitcoin's 2025 underperformance vs gold and Nasdaq, blaming dollar liquidity contraction. Gold surged on central bank buying, Nasdaq decoupled due to AI nationalization. He predicts a liquidity boom in 2026 will revive Bitcoin.

Michael Burry warns the Fed's RMP is stealth QE, masking banking system fragility. Despite $3 trillion in reserves, the $40 billion repo plan signals underlying risks, with treasury yield shifts reflecting end-year liquidity concerns.

Michael Burry warns that the Fed's Reserve Management Purchases (RMP) are covert quantitative easing designed to mask vulnerabilities in the banking system. Despite over $3 trillion in bank reserves, market intervention is needed, causing 2-month Treasury yields to rise and 10-year yields to drop. Concerns about year-end liquidity risks grow.