In 1994, the Federal Reserve raised interest rates, and a corner of the bond market most people had never heard of blew up. Bond investors lost roughly $1 trillion that year. One hedge fund manager, David Askin, saw his $700 million in mortgage funds collapse in a matter of weeks.

The thing that broke them was the mortgage bond. When the reader's neighbor takes out a 30-year mortgage, that loan is bundled with thousands of others into a bond, and that bond sits in his bond funds and his bank's balance sheet.

The machine we are drawing is how that bond behaves. Unlike a normal bond, it changes shape as interest rates move, and it always seems to change in the direction that hurts the owner. The reason is a hidden option the bondholder sold without ever being asked.

The agency mortgage bond market is now one of the largest in the world, with trillions outstanding. For three years the Federal Reserve was shrinking its holdings, letting these bonds run off its balance sheet. In December 2025 it stopped, after shedding about $600 billion of them.

The Fed still owns roughly 30% of the entire market. That makes it the whale, and its decision to stop selling removed a steady source of supply. The machine's behavior now depends on millions of homeowners and what they do next.

And right now those homeowners are frozen. Most of them locked in mortgage rates below 4% years ago, so almost none of them want to refinance or move. That stillness looks calm. It is also a coiled spring, as we will see.

President Trump is launching a new $250 bill with his face on it – the first living president to do so since Abraham Lincoln’s $10 demand note in 1861.

Source: The Kobeissi Letter, X.

Earlier this year, he instituted another currency change – insisting that his signature appear on all new bank notes.

If you’re starting to sense that Trump has taken an unusual interest in our money, you’re on the right track.

In fact, I’d like to show you that his new $250 bill is a mere distraction from a far bigger and more consequential change to U.S. currency being orchestrated behind the scenes.

Something that will affect every dollar you've ever saved or invested.

Bypassing all conventional legal and political channels, under the guise of national security, Trump is enacting a total money reset using a landmark executive order (14241).

Democrat or Republican, support him or despise him, it doesn't matter – the wheels are already in motion.

And that means every American may soon be forced to use Trump's New Dollar to fill your gas tank, buy groceries, pay the bills.

Which is why I've produced this critical new documentary laying out exactly what this means for your savings, your investments, and your family's financial future…

Detailing three important steps you can take today to prepare – including details on a core band of assets connected to Trump’s initiative that could surge, if this plays out as I predict…

Plus the name and ticker of my #1 move to make today.

As you’ll see in my briefing, the last time America reset its money like this – under Richard Nixon’s presidency in the 1970s – it created one of the greatest wealth divides in the history of our nation.

On one side, it minted an average of 1,300 new millionaires a day for over half a century. And on the other… the folks left behind, with many drowning in debt, and no idea how to use America’s new money to create wealth.

As Trump rolls out his new dollar, the question is:

Which side will you be on?

Start with a normal bond. It pays a fixed coupon and returns your money on a set date. If rates fall, it becomes more valuable; if rates rise, less. Simple, and symmetric. A mortgage bond breaks that symmetry.

The reason is that the homeowner can prepay. He can refinance or sell and pay off his loan early, at any time, with no penalty. The bondholder does not control when his money comes back. The homeowner does. That right is an option, and the bondholder is the one who sold it.

The load-bearing part is that sold option. When rates fall, homeowners rush to refinance, so the bond gets paid off fast, right when the holder would have loved to keep collecting its high coupon. His long bond suddenly becomes a short one, and he must reinvest the cash at the new, lower rates.

When rates rise, the reverse happens, and it is worse. Homeowners cling to their cheap mortgages and stop prepaying. The bond that was supposed to pay back soon now drags on for years, locking the holder into a below-market coupon exactly when he wants his money back to buy higher-yielding bonds.

This is negative convexity. The bond gets shorter when the holder wants it long, and longer when he wants it short. It is heads the homeowner wins, tails the bondholder loses. Investors accept it only because the bond pays a little extra yield to compensate, and because a government agency guarantees the payments will arrive.

The first joint is who holds these bonds. Banks, insurers, and bond funds own them for the yield and the government guarantee. But the guarantee only covers default. It does nothing about the duration lurching around, which is the risk that actually bites. Silicon Valley Bank held these very bonds, watched their duration stretch as rates rose in 2022, and the losses helped sink it.

The second joint is the hedging spiral. Big holders try to keep their portfolio's sensitivity to rates steady. When rising rates make mortgage bonds extend, these holders must sell other bonds to rebalance, which pushes rates up further, which makes mortgage bonds extend even more. The hedging that protects one holder can destabilize the whole market. That feedback loop is what turned 1994 into a massacre.

The third joint is the coiled spring in today's market. Because almost every homeowner is locked into a sub-4% rate, the bonds are barely prepaying and their durations are stretched long. If rates fall sharply, a wave of refinancing could hit all at once; if they rise, the bonds extend further still. The stillness is not safety. It is stored energy.

What persists: the payments themselves. Agency mortgage bonds carry a government-backed guarantee, so the holder is paid in full regardless of whether borrowers default. The question is never whether the money comes. It is only when, and that uncertainty is the whole game.

What can break: the holder's control over timing, at the worst possible moment. Negative convexity means the bond's shape shifts against the owner precisely when rates are moving fastest. A portfolio that looked conservative can suddenly carry far more interest-rate risk than its owner signed up for, as it did for banks in 2022.

This machine connects to two others the reader's money touches. It drives the mortgage rate he pays on his own home, and it sits in the bank bond portfolios where held-to-maturity accounting can hide the losses until a sale forces them out. The homeowner's option and the bank's balance sheet are two ends of the same wire.

The next reading arrives with each month's prepayment data and the Fed's decisions about its still-enormous mortgage holdings. Those numbers will show whether today's frozen, long-duration market thaws gently, or snaps the way it did in 1994.