Bessent's Bond Intervention Boosts Gold and Bitcoin

The week of August 17-21 was marked by significant developments in the bond and cryptocurrency markets. A key trigger for the rally in gold and Bitcoin was the Treasury's decision to increase liquidity-support buybacks of 10- to 30-year debt, from $2 billion to at least $4 billion per operation, starting September 9.

This move led to a decline in long-end bond yields, with the 30-year yield dropping about 10 basis points toward 5.19%. The weaker US dollar and higher gold prices lifted the precious metal, which reached a three-month high. Bitcoin also surged, growing by 20% to 25% within a single week.

Scott Bessent framed the Treasury's move as market-making in a thin August market, rather than real quantitative easing. However, traders started calling it a 'Bessent put,' indicating that the Treasury is willing to intervene if long-end yields rise again.