JEF Macro Weekly Background Reading on Treasury Twists; In Our Time

Equity Research USA | Equity Strategy August 29, 2026

JEF Macro Weekly—Background Reading on STRATEGY NOTE

Treasury Twists; "In Our Time" Zervos believes Treasury has become dominant policy actor in shaping fin'l conditions, leads to constructive view on bonds\equities; buybacks\curve- twisting operations provide backstop. GREED & fear says evidence that 4.75% on 10YR line in sand where Bessent has chosen to fight. Suppression in yields takes pressure off bonds, moves to dollar. Mohit does not think Fed hikes; price of controlling long-end would be weaker dollar, focus on commodities.

David Zervos—I believe the Treasury has become the dominant policy actor in shaping financial conditions, leading me to remain constructive on bonds and equities as buybacks and potential curve-twisting operations provide a powerful market backstop.

GREED & fear—The Treasury’s announcement of nearly US$1tn general account could be deployed to buy back Treasuries. This would be intrinsically inflationary, and also liquidity positive, as bank reserves would increase by same amount. The evidence of the desire to suppress yields with 4.75% on the 10-year yield is the line in the sand where Bessent has chosen to fight. Any effort to suppress yields takes pressure off the bond market but onto the dollar.

Mohit Kumar—We believe that the Treasury and the Fed would be working together rather than in competition to support the long end of the curve. Bessent has already mentioned some of the tools that the Treasury can use to support the long end. These include increasing the buybacks and a potential use of the TGA facility. We do not think that the Fed will actually hike. The price of controlling the long end of the curve would be a weaker dollar and hence we are focusing on dollar diversification trades through commodities and commodities-related sectors.

Thomas Simons—Why are we holding on to our call for the Fed to remain on hold through the end of the year, before eventually cutting rates? We are clearly more optimistic about the outlook for inflation. We are not so quick to dismiss the link between the labor market, wage growth, and inflation. The speech was more hawkish than we thought it was going to be, but it was not an explicit JefMacro Strategy * | Global Macro Team | commitment to raising rates as soon as next meeting. There is a risk that he keeps rates on hold in September, but we expect that the data will give him the cover that he needs. David Zervos * ~ | Chief Market Strategist |

Steven DeSanctis—Higher for longer does not hurt Small, but a big jump in rates does. It also Christopher Wood ^ | Global Head of Equity impacts several of our Themes with Quality and Valuations mattering but does not help Value, the Strategy | Cyclicals, or Smaller Small Caps. We give the Treasury the benefit of the doubt, and think the rise in rates will moderate. If not, we will shift positioning. Thomas Simons * | US Economist | The 77bps jump in 10-yr yield over last 6-months ranks in 91st percentile over time Mohit Kumar ‡ | European Economist Percentile Rank (RHS) 6-Mo Chg in 10-Yr Yield (LHS) | 2.0 100.0 Steven G. DeSanctis, CFA * | Equity Strategist 80.0 | 1.0

60.0 Aniket Shah, PhD * | Head of Sust. & 0.0 Transition Strategy 40.0 | -1.0 20.0 Desh Peramunetilleke ^ | Head of Quantitative Strategy -2.0 0.0 Jun-03 Dec-04 Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13 Jun-15 Dec-16 Jun-18 Dec-19 Jun-21 Dec-22 Jun-24 Dec- | . Source: FactSet; FTSE Russell; Jefferies ~ non-Research Department Economists.

Please see analyst certifications, important disclosure information, and information regarding the status of non-US analysts on pages 7 - 11 of this report. * Jefferies LLC / Jefferies Research Services, LLC ^ Jefferies Hong Kong Limited ‡ Jefferies International Limited

Equity Strategy Equity Research August 29, 2026

Jefferies Macro Forecasts: Equity Targets and Forecasts GDP Forecasts Index Levels '26 Target GDP 1Q26 2Q26 3Q26 4Q26 1Q27 2Q S&P 500 7,500 United States 2.2% 1.5% 3.3% 2.3% 2.6% 2.4% 2.3% 2.5% Russell 2000 3,190 Economic Forecasts JEF's Earnings Earnings (In '26) Growth (In %) Economy 1Q26 2Q26 3Q26 4Q26 1Q27 2Q S&P 500 $307.07 13.1 Average NFP Growth (…