Wall Street banks are warning that the government's attempt to push long-term interest rates down has flopped, which is bad for stocks in the short run but may set up a better end of the year.

• Treasury Secretary Scott Bessent tried to talk and buy long-term yields down, and the market pushed them right back up.
• Bank of America, Deutsche Bank, JP Morgan, and Goldman all say the failure damages the government's credibility and could mean a weaker dollar, stronger gold, and weaker stocks.
• The real economy looks fine: US business output is growing at the fastest pace in four years and hiring picked up in August.
• History says the market climbs after midterms, so near-term pain may be followed by a strong stretch into next year.
• The big wildcard is AI spending, and the coming Anthropic IPO could expose how much debt is behind it.

Outlook: Expect choppy, weaker markets into the Jackson Hole meeting, with a more bullish setup once midterms pass.