On Friday, August 21, the core issue in the US macroeconomic landscape shifted from simply discussing whether an economic recession was imminent to whether the slowdown in growth, rising energy costs, and fiscal financing pressures could be simultaneously absorbed. During market trading on August 20, the 10-year US Treasury yield rose again to approximately 4.69%, and the 30-year yield remained above 5%. This rebound in long-term interest rates occurred after the Treasury Department expanded its bond buyback program, indicating that recent volatility was not simply a liquidity event. Simultaneously, the total US federal government debt surpassed $40 trillion for the first time. On the other hand, energy prices once again became a macroeconomic variable. Crude oil prices rose to around $93 per barrel, with the diesel market particularly tight. It's important to distinguish that the real record-breaking event was the diesel crack spread, which reached $102.20 per barrel intraday on August 17, not the record-breaking national retail diesel price. The rapid expansion of diesel crack margins essentially reflects a significantly tighter supply of refined oil products than crude oil, a change whose significance for the inflation structure is even greater than simply observing crude oil prices. The size of debt itself does not automatically trigger financial stress. What the market truly prices is how much new bond issuance will need to be absorbed in the future, and what level of risk compensation is required to hold long-term debt. The current total debt exceeding $40 trillion, occurring simultaneously with a renewed rise in long-term yields, brings fiscal variables more directly into the interest rate pricing framework. The US Treasury recently increased the scale of bond repurchase operations, for example, raising the ceiling for some 3- to 5-year liquidity support operations to $4 billion and the ceiling for 20- to 30-year operations to $2 billion. Repurchases can improve the liquidity of older bonds and reduce friction in certain markets, but they cannot change the net financing demand corresponding to the fiscal deficit. Therefore, their role is closer to market microstructure management than eliminating the supply of long-term bonds. This also explains why long-term interest rates rebounded quickly after the repurchase news initially lowered yields. Short-term yields reflect the Fed's policy path more, while long-term yields also include inflation risk, fiscal supply, real interest rates, and duration risk compensation. When the 10-year and 30-year Treasury yields remain high after fiscal operations, it indicates that the market's focus is no longer just on the Fed's next meeting, but on whether the risk compensation required for holding long-term nominal debt has structurally changed. US non-farm payrolls fell by 23,000 in July, significantly weaker than the average monthly increase of 34,000 over the past 12 months, and the May and June figures were revised down by a combined 103,000. The unemployment rate remained relatively stable at 4.1%, but the labor force participation rate was only 61.4%, a decrease of 0.7 percentage points from January. Looking solely at the unemployment rate can underestimate the extent of the marginal cooling in the job market. Growth data also indicates a decline in momentum. Real GDP grew at an annualized rate of 1.5% in the second quarter, lower than the 2.1% in the first quarter. While consumption continues to expand, the economy cannot yet be described as a typical recession, but the combination of investment, government spending, and job growth suggests that the demand-side buffer is weakening. Meanwhile, the Consumer Price Index (CPI) rose 3.4% year-on-year in July, and the core CPI rose 2.5% year-on-year. Notably, the energy index rose 14.7% year-on-year, and the gasoline price index rose 24.6% year-on-year. Therefore, the current inflation problem is not a return to full-blown price spiral in core services, but rather an energy shock that is raising overall price levels again and may create a second round of transmission through transportation, logistics, agriculture, and manufacturing costs. The diesel crack spread breaking through $100 per barrel is of particular significance. Diesel is an important input for road freight, agricultural machinery, some industrial equipment, and supply chain transportation; therefore, its price changes exhibit clear intermediate goods characteristics. When crude oil prices rise, businesses face increased basic energy costs; when diesel crack spreads widen sharply at the same time, it means additional strain in the refining and finished product sectors. Combined, these factors could cause transportation costs to rise significantly faster than the increase in crude oil prices themselves. The latest energy forecast has raised its 2026 wholesale diesel average price forecast to $3.37 per gallon, 8.5% higher than the previous forecast. If these changes continue, they will first affect producer costs and then gradually impact the prices of end goods and services. This is the part of the current inflation structure that the market should pay the most attention to. Housing inflation is cooling, with the housing index rising only 0.1% month-on-month in July, but energy prices may create a new exogenous shock. This type of inflation is particularly troublesome for monetary policy because raising interest rates cannot increase refining capacity or directly improve energy supply, but may further depress demand and employment. The Federal Reserve maintained the target range for the federal funds rate at 3.50% to 3.75% at its July meeting, while clearly stating that inflation remains above the 2% target and specifically mentioning the energy supply shock. More notably, three committee members favored a 25-basis-point rate hike in the vote, indicating a lack of consensus within the policy apparatus regarding tolerance for inflation risks. Therefore, the traditional logic that a weakening economy equates to a rapid easing of monetary policy cannot be simply applied. Slowing employment increases policy sensitivity to growth, but rising energy prices reduce the flexibility of easing policies; rising long-term yields increase financing costs for businesses and governments, while high debt levels make the fiscal system more sensitive to interest rates. While AI-related capital expenditures can still support some investment and productivity, they cannot directly offset energy costs, fiscal interest payments, and a cooling labor market. The bond market has become a major stressor precisely because these contradictions ultimately manifest in the yield curve through real interest rates, inflation compensation, and term premiums.