Ten-year Treasury notes have moved about 100 basis points this year, and the market has gone from pricing almost three Federal Reserve rate cuts to two rate hikes.
Rates that high would normally have broken something. Dan Orlando, who runs the desk that trades them at Barclays, said nothing has broken because the biggest source of demand in the economy right now does not respond to the cost of money at all.
"And whether The Fed hikes 50 or 100 basis points, I don't see that slowing down and that capex has been largely responsible for keeping the economy extremely resilient."
Orlando has traded the US Treasury market his whole career and was pulled off the desk mid-session to record this, on a day the European Central Bank raised rates and Brent crude made a new high.
The full interview is covered here so you can skip it.
Here are the 7 calls that matter.
👤 Guest: Dan Orlando, Head of US Rates Trading at Barclays
🎙️ Host: Patrick Coffey, who presents the Barclays Brief podcast from the bank's New York office
📰 Published: 14 September 2026 on Barclays Brief · recorded 10 September 2026
🟣 Apple Podcasts | ⏱️ 11 min
Key Takeaways
The AI construction boom is the reason higher rates have not slowed the economy, because it does not depend on the rate
Orlando says a 50 or 100 basis point move from the Fed would not change the pace of data-center building
Yields went from pricing almost three US rate cuts to two rate hikes in the space of a year
The cause he names is inflation and energy, not growth
Tripling the Treasury's long-end buyback program moved yields the wrong way
Within two days the sell-off resumed, which he reads as evidence that the buybacks are too small next to the deficit
Higher rates froze housing without producing the construction job losses that normally follow
The same workers and materials went to data centers instead
Investment-grade companies will sell more than $2 trillion of bonds this year, a record
The most crowded trade in global rates is now the most challenged one
Kevin Warsh was expected to cut when he took the job; at Jackson Hole he walked his July comments back instead
1. Why Yields Moved 100bps
Patrick Coffey opened by calling the US rates market one of the most important battlegrounds in the global economy, with the ten-year Treasury yield approaching 5%, and asked Orlando to explain why yields are where they are while the economy keeps surprising to the upside.
Orlando's answer is inflation and oil, not growth: "So I think the root of the move, I mean ten-year notes have moved about 100 basis points since earlier in the year. It has been the sort of inflation backdrop and the energy story obviously centered out of the Middle East."
The repricing of Fed policy is the whole move in one sentence: "And we went from a period of pricing in almost three rate cuts earlier in the year to now, you know two rate hikes."
Government bond markets across Europe and Japan sold off alongside Treasuries, he said, which is why he does not treat this as an American problem
"So certainly not a US story in isolation," he said
Central banks are tightening together rather than in sequence: the European Central Bank raised rates on the day of the recording and Orlando expects the Bank of Japan to raise as well
He flagged two events still ahead of the release — the Federal Reserve meeting, which he called very consequential, and the consumer price index reading due the following morning
2. Capex That Ignores Rates
The second question was whether this rate cycle is different, and if so why the usual damage has not appeared. Orlando's answer is a single source of spending that is not financed on the margin by short-term interest rates.
The mechanism is that the spending decision is strategic rather than financial: "There's not a rate dependency on this. There is a race to build data centers, invest in infrastructure and to come out of the AI race on top."
He put a size on the policy move it would take to stop it, and said it would not be enough: "And whether The Fed hikes 50 or 100 basis points, I don't see that slowing down and that capex has been largely responsible for keeping the economy extremely resilient."
He described the spending as multi-generational capital expenditure, and said it has been employing people in construction and across other industries
"And has really been a big boom for the economy," he said of the same spending
3. Housing Froze, Jobs Didn't
Coffey did the arithmetic out loud for the audience: the Fed raises rates to slow the economy, and this time it has succeeded in freezing the housing market without producing the construction job losses that have accompanied every previous freeze. He then asked whether the market is underestimating how long policy rates have to stay high.
Orlando would not commit to a path. "Well, we'll have to see," he said, framing the whole move as a reaction to much higher energy prices, mainly crude, and pointing to Brent making new highs on the day
The geopolitical assumption behind the oil price has not played out: "You know the outlook for the Middle East is cloudy at best right. We thought there would be some resolution and there obviously hasn't been. And looks like it could in fact drag on for much longer."
On the jobs, he accepted Coffey's framing and named the substitution: construction workers who would normally be laid off in a housing downturn are moving to data-center construction instead
The housing market's own lag is the mortgage book: "We are coming from the Covid levels, where money was very cheap and there were a lot of mortgages taken out at very low levels, and it takes some time for rates to be high for that to sort of make its way through the system."
4. Buybacks Can't Beat Deficits
Coffey raised the Treasury's announcement, the day before the recording, that it was tripling the size of its buyback program for long-maturity debt — the operation in which the Treasury buys back bonds that are already outstanding — and asked whether that can move long-dated yields.
Orlando pointed out the tool is old rather than new: buybacks predate the 2008 financial crisis, and he said they came materially to the rescue during the Covid period
His answer is that they can work, but not at this size: "But it sort of depends on size and scope. So the market is enormous, can this help? For a short term potentially, but the root of the problem is really deficits and more Treasuries to come."
Coffey pushed back with the market's own verdict — the program is now at $6 billion and yields rose anyway, against talk in the market of $8 or $10 billion — and asked what number would have held yields flat
Orlando's reply was to change the subject to demand, which he said is not the problem: "We had a $22 billion bond auction today. So you know and it came through the market demand is quite high and the market is very liquid."
The supply side is where he expects the pressure to come from: "The deficits look to be increasing, they are likely to increase coupon issuance next year."
He conceded $8 billion might have bought a better day and then said it would not have mattered: "And within two days the market sort of resumed its sell-off. So the impact was not lasting."
5. A Record $2T of Bond Sales
Coffey said the narratives had been whipsawing faster this year than in any year he could remember, and asked what the desk's smartest clients are actually doing. Orlando's answer was that they are buying yield, and increasingly buying it from companies rather than from the government.
The first move is out along the maturity scale: "Well, I think you can definitely say yields are becoming attractive. So there is a desire to extend duration somewhat, even if it's into the belly of the curve and pick up yield." The belly of the curve is the intermediate maturities, roughly five to ten years
The second is corporate bonds, and the calendar is setting a record. Orlando said investment-grade issuance this year will be north of $2 trillion
The largest technology companies have come to market with what he called massive deals, and with longer maturities than the investment-grade calendar usually carries, which has given buyers a chance to own long-dated bonds at attractive levels
The catch is that everyone is selling at once: "The problem is there's a lot of it – and it's global. So there's lots of competing alternatives."
What would clear it, on his account, is equities cracking: "If the equity market holds up, which it has been, perhaps it's less attractive. But I think if we get to a level of rates where equities become less stable, I think you can see the market stabilize and perhaps perform."
6. The Crowded Steepener Trade
Asked for the most crowded position in US rates, Orlando named the curve steepener — a bet that yields on long-maturity bonds rise faster than yields on short-maturity ones — and said it has been the consensus trade all year, in the US and everywhere else.
The trade's premise was a Federal Reserve that would cut: "When Warsh sort of took the job it was believed that, he would go along with the agenda and cut rates."
What happened instead was a hawkish turn at Jackson Hole: "And in fact at Jackson Hole, we saw he was pushing back quite a bit and sort of walking back some of his July comments to gain credibility as an inflation fighter, and in fact, energy prices continue to move upward."
With every major central bank moving the same way, the premise has gone: "But you know that steepener narrative has become extremely challenged with monetary policy globally."
He put a number on what the market expects from the Fed meeting: "ECB hike today, BOJ is going to hike, and it's looking like the Fed is, they might hike as well I think we're priced 70% for moving Sept."
He twice called the consumer price index reading due the next morning very consequential, alongside the Fed meeting itself
7. The Dog That Did Not Bark
Coffey closed with his own read of the conversation rather than a summary of the guest's, and walked the audience through the channel that is supposed to connect rates to the real economy.
His description of the textbook sequence: the Fed raises rates, mortgage rates rise, housing activity slows, construction is hit, which costs jobs and spending, local economies contract, confidence falls and spending retracts
The step that has not happened this time is the one in the middle: construction job losses have been limited because the AI capital expenditure cycle created what he called a parallel source of demand for the same materials and skills
His conclusion is a warning to anyone positioned for a slowdown: the bond bulls expecting a much weaker economy because of higher yields will likely be disappointed in the short term
Barclays' research clients were pointed to a note on the subject titled "The dog that did not bark for now"
Bonus Insights
The conversation was recorded on Thursday 10 September and published on 14 September, and Coffey said so on air so listeners would know prices had moved since
Coffey recorded from New York and described the session as another very busy day for the desk; Orlando called it a busy day and a busy week
Coffey's framing of the trading environment was that macro, equity and credit dynamics are all working against investors at once, and that the narratives are turning over faster than in any year he can recall
Orlando's bottom line is that the resilience everyone is trying to explain comes from one place — a data-center build-out that is indifferent to the cost of money — and that neither Treasury buybacks nor a crowded bet on a steeper yield curve is going to change what deficits and energy prices are doing to long-dated yields.
Products, Companies & Tools Mentioned
Barclays (Orlando's employer; the bank's US rates trading desk and the research behind the episode)
US Department of the Treasury (Tripled its buyback program for long-maturity debt the day before the recording, to $6 billion, and held a $22 billion bond auction on the day of it)
Federal Reserve (The market has moved from pricing almost three cuts to two hikes; Orlando said it was priced 70% for a move in September)
European Central Bank and Bank of Japan (Both named as part of a synchronized global tightening — the ECB hiked on the day of the recording and Orlando expects the BOJ to follow)
Books & Resources Mentioned
The dog that did not bark for now – Barclays Research (The note Coffey pointed clients to at the end, on why higher yields have not yet done the damage they normally do)
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