US Treasury Secretary Scott Bessent announced that the Treasury would at least double its repurchases of long-dated securities, from $2 billion to $4 billion per round, starting in September and continuing through November 4. He further indicated that these buybacks could exceed $4 billion per issue. This move aims to steady the long-term Treasury market, where borrowing costs had hit multi-decade highs, with the 30-year Treasury yield reaching approximately 5.33% to 5.34% earlier in the week.
The bond buyback announcement caused long-term Treasury yields to fall, with the 30-year yield dropping 8 to 10 basis points initially. This intervention by Bessent weakened the dollar, which hit a multi-month low. A weaker dollar and softer Treasury yields made non-interest-bearing assets more attractive, leading to substantial gains in gold and Bitcoin.
Gold surged, adding 1.53% to $4,582.66 per ounce and was up 1.87% to $4,597.83 per ounce, heading for a third consecutive weekly gain of about 5%. Bitcoin also experienced a significant rally, jumping approximately 8% to $77,433.36 and gaining nearly 24% over the week, after trading in the mid-$64,000 range before the announcement and reaching over $72,000. Analysts, such as Naeem Aslam of Zaye Capital Markets, noted that lower Treasury yields and a weaker dollar are supportive of Bitcoin, reducing the relative appeal of cash and fixed-income assets.
While the current $4 billion per operation buyback program is relatively small compared to the $32 trillion Treasury market, investors view it as a strong signal from the Treasury. Bas Kooijman, CEO of DHF Capital, suggested that stabilizing bond yields and upcoming operations could create opportunities for gold to recover. The timing of the announcement, following a surge in long yields, suggests Treasury is willing to intervene when market movements become disruptive, a reaction function that markets are now aware of, according to Investing.com.
Beyond the bond buybacks, US Treasury Secretary Scott Bessent also announced plans to impose the toughest-ever sanctions on Iran, with a news conference scheduled for Monday to detail the specific measures. This comes as oil flows through the Strait of Hormuz remain disrupted, and Middle Eastern supply and refined-product availability are already constrained, contributing to oil prices staying on track for a second consecutive weekly gain despite a Friday dip.
