CNBC Daily Open: Monitoring Iran’s economy. bond losing game

Hello, my name is Anique Bao from Singapore. Welcome to another edition of CNBC’s Daily Open.

U.S. Treasury Secretary Scott Bessent is fighting the financial battle on two fronts.

Bessent told CNBC on Thursday, hours after President Trump declared an “economic D-day” against Iran, that the United States would not need to resume large-scale combat with Iran.

Mr. Bessent, long one of President Trump’s most trusted economic advisers, has since turned the fight closer to home, touting Treasury buybacks that could exceed $4 billion and arguing that it is “very likely” that the U.S. budget deficit will peak. But bond yields completely ignored him, wiping out his own intervention and sending the S&P 500 down 0.9%.

In Japan, overall prices have just reached their highest level this year due to soaring energy costs.

Investors have a lot to weigh when considering whether Washington’s words will still move markets in the same way they have in the past.

Bessent’s bet is that “maximum economic pressure” can end what six months of war failed to do: a one-two punch of sanctions and the existing U.S. naval blockade in the Gulf of Oman, rather than a new attack.

The push follows President Trump’s Truth social post the day before, pledging an “economic war” against Tehran and attacking the country that provides “every kind of lifeline” to Iran, with Bessent calling it “the greatest concerted economic isolation in the history of the world.” He is expected to provide further details at a press conference on Monday.

President Trump claimed that Iran’s economy was already collapsing and that his regime was “on the edge of danger.” The war-torn country’s GDP likely shrank further during the war, and inflation soared to historically high levels.

But a former adviser to Iran’s central bank has pushed back, arguing that while Iran’s economy is not as close to collapse as Washington claims, the neighboring United Arab Emirates’ decision to sever trade ties could still deal a severe blow to Iran’s economy.

In an interview with CNBC, Bessent said accelerating bond purchases could exceed the announced amount of $4 billion and promised to “create a market” to halt the sale of long-term bonds.

He said it’s “very likely” that the U.S. budget deficit has peaked under the Trump administration. The U.S. monthly budget deficit exceeded $432 billion in July, the highest level in more than a decade.

But the bond market wasn’t buying it. Yields rebounded, erasing the decline caused by Bessent’s intervention and pushing the S&P 500 lower.

Futures prices were little changed early Thursday, suggesting traders are still deciding whether the selloff was a one-day scare or the beginning of a real showdown between the Treasury and the bond market.

cancer vaccine for moderna and Merck The first-ever late-stage clinical trial showed promise, sending both stocks soaring.

Bitcoin also did well, jumping 12% in two days as the Washington government and crypto industry executives made a last-ditch effort to push the industry’s long-sought crypto market structure bill, the Clarity Act, over the line.

Japan’s historic yen intervention brought a ‘turbocharge’ to the carry trade

Japan’s historic effort to support the yen may have had the unintended consequence of giving some investors a better opportunity to double down on carry trades.

Japanese investors bought more than 5 trillion yen in net foreign stocks and long-term bonds in the two weeks ending Aug. 15, and sold more than 300 billion yen in the previous two weeks, according to Ministry of Finance data.

Market watchers say the purchases suggest investors are taking advantage of the yen’s sharp rise after last month’s joint U.S.-Japan foreign exchange intervention to buy up overseas assets at more favorable exchange rates.

— Li Yingshan