Oil Surge and Bond Selloff Weigh on Risk Sentiment

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In Today's Note

• Oil surged on US-Iran tensions, pushing yields higher and risk assets lower, with BTC at $76.8K and ETH at $2.39K.
• The SEC moved to modernize rules for tokenized markets, Strategy opposed MSCI’s proposal, and Binance expanded stock and ETF options.

Market Snapshot: Overnight Moves

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Macro & Markets

• Another surge in oil prices and selloff in government bonds rippled through markets, dragging down risk sentiment and raising market expectations for a rate hike in September. 
• Brent crude oil jumped above $96 per barrel while West Texas Intermediate crude topped $90 amidst escalating conflict between the US and Iran. 
• The yield on 30-year US government bonds have risen back to the levels they traded at just before Treasury Secretary Scott Bessent announced an expanded buyback program for longer-dated off-the-run treasuries. 
• The 10-year yield, a benchmark for many borrowing costs in the economy, is more than 10bps higher than before the Treasury announcement. 
• Shorter-dated two-year yields, most sensitive to the near-term outlook for Fed policy, rose 6bps on Tuesday to 4.40%. 
• Meanwhile, Germany’s 30-year yields touched their highest since 2011, 30-year UK gilts rose to a level last seen in 1998, and the equivalent Australian rate set a fresh record high in data going back to 2016. 

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• In an interview on Newsmax yesterday, Bessent reiterated that his buyback efforts are an attempt to push market pricing back towards fundamentals — “I don’t think that I can change the equilibrium interest rate. But what I can do is I can slow things down. I am making sure that there is not a bad, big adverse outcome, and that everything that is done is fact-based.”

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• The moves in yields and oil saw reduced appetite for risk-on assets, with US equities starting the month down 0.71%. 
• The Nasdaq-100 closed -1.29%, while a gauge of chipmakers declined more than 2%. 
• BTC declined from $79,000 down to an intraday low around $76,400 and has since ranged around $77,000.

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• President Trump said that the US launched strikes against targets in Iran after Iranian forces attempted to put mines in the Strait of Hormuz and fired eight missiles at a US military base in Jordan. 
• Within hours, Iran said its forces retaliated to the attack with a "decisive operation" against US bases in the region. The Islamic Revolutionary Guard Corps claimed the new fighting “only tightened the lock on the Strait of Hormuz”. 

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• Markets are currently pricing a 68% chance of a rate hike in the Fed’s next meeting on Sep 16, 2026, up from 40% only a week earlier, prior to Chair Warsh’s Jackson Hole speech. 
• Federal Reserve Governor Michael Barr said yesterday that the central bank should raise interest rates if inflation doesn't come down adequately and that the outlook for inflation should be the Fed’s focus. 
• In prepared remarks Barr said, "If trends in the data give me some confidence that inflation is moderating on a path to 2%, then I think we can take a bit more time to assess our policy stance. However, if inflation appears not to be moderating sufficiently, then I think we should act decisively to raise rates."
• Similar to some of his other colleagues Barr said, "With inflation above target for a protracted period, there is a risk of broader price pressures taking hold, a risk I am watching closely”. 

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DeFi / Web3 / Altcoins / Crypto

• The U.S. Securities and Exchange Commission (SEC) has proposed modernizing its transfer agent rules, largely unchanged since the late 1970s, to reflect electronic markets and technologies including blockchain, tokenized securities and AI.
• Transfer agents, which maintain securities ownership records and process transactions such as share transfers, mergers and dividend distributions, would face updated requirements covering electronic systems and risks such as blockchain data integrity, tokenized-asset security and automated processes.
• The proposal comes as firms including Injective, Securitize and tZERO operate as SEC-registered transfer agents supporting tokenized assets, with the SEC accepting public comments on the changes for 60 days.

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• Strategy, the world’s largest corporate bitcoin holder, has formally opposed a proposal from MSCI, a global index provider whose benchmarks are widely used by investment funds, that could exclude companies whose operating assets represent less than 50% of total assets from its global equity indices, calling the plan “discriminatory, arbitrary, and misguided.”
• Strategy argues the methodology unfairly targets digital asset treasury (DAT) companies by treating bitcoin as a non-operating asset while potentially allowing other asset-heavy businesses, including REITs and energy infrastructure companies, to remain eligible.
• MSCI is accepting feedback until Sept. 30, plans to announce its decision by Oct. 16, and could implement the changes in December, with a May simulation indicating Strategy, Metaplanet and Yellow Cake would have been removed under the proposed screening.

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• Cango, a NYSE-listed bitcoin mining company, reported an $81.6M Q2 net loss and $50.8M in revenue, sending its shares down more than 20% to around $1.89.
• Cango reduced its operating hashrate to 27.58 EH/s as it phased out older mining machines, producing 656 BTC during the quarter and holding 1,065 BTC worth about $82.8M.
• The company is prioritizing mining profitability while diversifying into AI infrastructure, including converting its Georgia mining site for GPU computing, with related revenue expected to begin in Q3.

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• Binance, the world’s largest crypto exchange by trading volume, is adding physically settled options on more than 1,000 U.S. stocks and ETFs for eligible non-U.S. users, with orders routed through its regulated broker Nest Trading to Alpaca Securities for execution, settlement and custody.
• Exercised options will result in users receiving or delivering the underlying shares, while eligible retail traders can buy calls and puts with their maximum loss limited to the premium paid.
• The expansion follows rapid growth in Binance’s traditional-finance products, with TradFi perpetual futures volume reaching $433.4B in August, roughly 15 times January’s $29.5B, including $342.9B from equity-linked perpetuals.

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• DeFi Development Corp., a Nasdaq-listed Solana treasury company, plans to raise up to $20M through an initial public offering of Variable Rate Series C perpetual preferred stock to fund additional SOL purchases and other crypto-related investments.
• The preferred shares will have a $10 stated value and an initial annual dividend rate of 13%, with DeFi Development planning to reserve enough assets at closing to cover the first 12 months of dividend payments.

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• Hyperliquid Strategies Inc. (NASDAQ: PURR), a HYPE-focused digital asset treasury company, expanded its committed equity facility with Chardan Capital Markets from $1B to $2.5B, allowing it to issue and sell additional PURR shares to Chardan over time.
• The additional $1.5B of potential funding increases Hyperliquid Strategies’ capacity to raise capital for its treasury strategy, which centers on accumulating and staking HYPE, the native token of the Hyperliquid blockchain, though issuing new PURR shares could dilute existing shareholders.

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This Week's Calendar

Charts of the Day

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Figure 1. Block Scholes BTC Risk-Appetite Index (white, left-hand axis) and BTC spot price (orange, right-hand axis).

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Figure 2. Block Scholes ETH Risk-Appetite Index (white, left-hand axis) and ETH spot price (purple, right-hand axis).

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Figure 3. BTC at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes.

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Figure 4. ETH at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes.

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Figure 5. BTC 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes.

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Figure 6. ETH 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes.

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