Fat Tail Macro — TLT Weekly Dashboard (Feb 26)
One week in. Here’s what changed.
THE TAKE
One week in. Here’s what changed.
The biggest development wasn’t the data — it was the Supreme Court striking down Trump’s IEEPA reciprocal tariffs on Friday. The constitutional check was unexpected, and the administration pivoted within 48 hours to a blanket 10% tariff on all imports under an economic emergency declaration. They’re already seeking to raise it to 15%.
Here’s why this matters for TLT: the tariff uncertainty is freezing corporate decision-making. When businesses can’t model their input costs, they delay capex. When they delay capex, they slow hiring. When hiring slows, the labor market softens. And when the labor market softens, the Fed cuts.
We’re watching that transmission mechanism in real time. The 10-year yield dropped to 4.04% — near three-month lows — and the move wasn’t driven by a flight to safety. It was driven by AI displacement fears and trade policy uncertainty pushing funds into Treasuries. That’s structural demand, not a panic bid.
Meanwhile, short interest held at 128.8M shares. The initial wave of covering from 150.5M to 128.8M has paused. This is normal in a compression phase — the weakest shorts covered first. The remaining 128.8M are the committed bears, and they’ll need a bigger catalyst to capitulate. That catalyst is coming.
The next two weeks are loaded. Core PCE on Friday (Feb 28), ISM Manufacturing next week, and Non-Farm Payrolls on March 7. If any of these print weak, rate cut expectations surge and the next wave of short covering begins.
One week ago I published the thesis at TLT $89.66. Today it’s $89.90. We’re up $0.24. That’s noise. The signal is that yields are falling, the Fed has two dissenting members who want to cut, and the macro backdrop is shifting in our direction.
Patience. The setup is building exactly as mapped.
—FTM
Not financial advice. I hold Jan 2027 $110 calls and Jan 2028 $100 calls on TLT. Full thesis and positioning disclosed in The Most Crowded Short in the Market.
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