Point of View: The Federal Reserve Has Over-Eased, with a 65% Chance of Stagflation in the United States

After news broke that the U.S. Treasury may draw nearly $1 trillion in Treasury General Account (TGA) funds to support its recently announced expanded U.S. Treasury bond repurchase program, the market received a short-term boost. U.S. Treasury Secretary Scott Bessent said such operations could even exceed this new minimum level. However, the Treasury did not specify at the time how it would fund these purchases. Per HTX market data, Ethereum rose above $2,500, while Bitcoin broke through $78,000. Per BIT (bit.com) market data, U.S. stock index futures pared some losses: S&P 500 and Dow Jones futures are currently down around 0.1%, and Nasdaq futures are down roughly 0.4%. U.S. Treasuries extended their rally, with the 10-year Treasury yield falling 4 basis points to 4.70%. Per Bitget market data, spot gold climbed above $4,670 per ounce, up 1.47% on the day.

Jiang Zhuoer, founder of BTC.TOP (LeiBit Mining Pool), said in a recent post that two trades he made are worth summarizing. One was a short position on Ethereum (ETH): he entered at $1,834 and stopped out at $2,100, losing millions of dollars. This is his single largest loss since he began trading swing positions, with multiple mistakes made during the process. The other was a short position opened at $2,525 that took profit at $2,450, successfully catching the market top within less than 1% of the peak — a rare stroke of luck. He will conduct a detailed review of his prior trades later.

According to HTX market data, Ethereum has surged past $2,500, posting a 1.6% gain over the past 24 hours.

A senior U.S. Treasury official said the U.S. Treasury may draw funds from its General Account (TGA) — nearly $1 trillion — to fund the recently announced expansion of its U.S. Treasury bond repurchase program. Using the TGA would give the Treasury a powerful tool to influence long-term bond yields. Last week, the U.S. Treasury announced it would double the repurchase size of long-term non-newly issued bonds, raising it from $2 billion to at least $4 billion, a move that surprised markets. Treasury Secretary Scott Bessent said the actual operational size could even exceed this new minimum threshold. However, the Treasury did not disclose the source of the repurchase funds. Most market participants had previously expected the Treasury to raise funds by issuing short-term Treasury bills, though the senior official did not rule out this option. According to market data from BIT (bit.com), U.S. Treasuries extended their rally, with the 10-year Treasury yield falling 4 basis points to 4.70%.

Serenity remains bullish on optical communications stock Applied Optoelectronics (AAOI) but criticized the company’s at-the-market (ATM) equity financing. “We dislike AAOI’s over-reliance on ATM offerings, a principle that applied equally to IREN and POET before, and we will not treat AAOI differently,” the firm stated. Its sharpest criticism centers on timing: the roughly $600 million ATM should have been launched after the completion of 1.6T optical module qualification, a milestone expected in the coming weeks, or structured as convertible bonds priced above market value. Instead, the company rolled out the offering after its share price dropped from $220 to $130, and every subsequent use of the ATM will trigger short-term structural selling pressure and sustained stock price suppression. Serenity explained its core rationale for maintaining a heavy position in AAOI: the firm faces capacity constraints while demand visibility is very high, making AAOI more attractive than POET. “Investors can hold AAOI’s stock long-term without supporting every business decision of its management,” it said. “You can absolutely criticize the management’s financing pace while still holding its stock based on the supply-demand structure.” AAOI reported 86% year-on-year revenue growth in the second quarter, beating expectations, but its third-quarter guidance was weak. The latest ATM offering has further amplified market concerns over short-term valuation and liquidity.

Pakistan’s Virtual Assets Regulatory Authority (PVARA) has announced the official launch of the country’s cryptocurrency regulatory regime. Digital asset companies must submit applications for No Objection Certificates (NOCs) by the September 5 deadline, or cease operations. PVARA noted that licensed entities must comply with strict operational and security standards, including safeguarding client funds, maintaining robust cybersecurity, providing clear disclosures, and upholding transparent business practices. The licensing rules under Pakistan’s Virtual Assets Act 2026 cover 11 crypto-related activities, including custody, trading platforms, brokerage dealers, and derivatives. Earlier, Pakistan’s State Bank lifted the ban on financial institutions providing banking services to crypto firms in April, though banks themselves remain prohibited from investing in, trading, or holding crypto assets. Pakistan had long adopted a restrictive stance on cryptocurrencies; the establishment of this regulatory framework signals a policy shift from restriction to regulation, aiming to integrate the crypto industry into the formal financial system within anti-money laundering (AML) and consumer protection frameworks.