RiskSnap - Newsworthy Notes, 28-Aug-2026

Friedberg Mercantile Group (https://friedberg.ca/resources-and-reports/conference-calls-reports/) provides an interesting position on inflation. He is net short equities, long commodities, and long inflation exposure through CPI swaps. There is a meaningful development today, and it makes Friedberg's trade more interesting—but not uniformly better.

The strongest new evidence is on the inflation/CPI-swap leg. July headline PCE is still 3.7% and core PCE 3.3%, and Fed Chair Kevin Warsh said at Jackson Hole today that the Fed still has “work to do” unless underlying inflation moves clearly and sufficiently quickly toward 2%. Markets responded by sharply increasing the probability of another rate increase; the 2-year Treasury yield jumped to about 4.29%. That materially supports Friedberg's premise that inflation is proving more persistent than markets had expected.

The short-equity leg has mixed evidence. U.S. equity funds suffered $22.33 billion of net withdrawals in the week through August 26—the largest weekly outflow since March—which supports the idea that positioning is becoming less complacent. But the market itself has remained remarkably resilient. The Treasury market is more supportive of Friedberg's concern. Yesterday's $44 billion 7-year auction cleared at 4.512%, near a two-year high, and indirect bidders—including foreign buyers—took only 60.8%, below their recent average. Today the 10-year is around 4.67% and the 30-year around 5.16%, despite Treasury's enlarged buyback program. That is significant: Treasury is trying to relieve pressure and long yields are nevertheless staying very high. This strengthens the fiscal/yield part of Friedberg's thesis.

The long-commodity leg has weakened in the short run.

The most important number to RiskSnap remains that ~4.67% 10-year yield despite Treasury buybacks. If the 10-year pushes decisively toward 5% while equities continue trading near highs, that would make the timing of the equity short considerably more compelling.

Global Hedge Fund Industry

IOSCO (International Organization of Securities Commissions)The global investment fund industry boasts over US$85 trillion in assets under management (AUM), according to new data from the International Organization of Securities Commissions (IOSCO) — which highlights hedge funds’ higher risk exposures compared with traditional investment funds.(March 2026). This compares with the last reporting on this page of US $3.2 trillion in Nov 2017.

Basel III

The Basel III accord presents a 72.5% floor on regulatory capital benefits that a bank using internal models can derive compared to revised standardized approaches. The transitioning is in stages, beginning on the 1st of January each year, 50% (2022), 55% (2023), 60% (2024), 65% (2025), 70% (2026) and 72.5% on 1 Jan 2027. The Revised standardised approach, Revised IRB framework, Revised CVA, Revised operational risk framework and Revised market risk framework are to be implemented by 1 Jan 2022. (Ref: Basel Committee on Banking Supervision. High-level summary of Basel III reforms. Dec 2017).