Treasury Buyback Boost Fizzles as Yields Soar and Macro Environment Deteriorates
The US Treasury's announcement to triple the size of its long-term bond buybacks from $2 billion to $6 billion has failed to boost Bitcoin's price, unlike a similar move last month.
In August, the Treasury doubled the maximum size of liquidity-support buybacks for longer-dated government debt, and Bitcoin's price surged in response. However, this time around, despite the increased buyback amount, the 10-year Treasury yield jumped to 4.85%, its highest level in almost three years.
The difference between the two announcements lies in the lack of surprise this time around. The increase to $6 billion in buybacks doesn't seem to be enough, with Wall Street estimates stretching towards up to $10 billion following Treasury official Scott Bessent's comments.
The macro environment continues to deteriorate, with oil prices surging and inflation fears at an all-time high. This has raised expectations that the Federal Reserve could hike interest rates on September 16, pushing yields faster than Treasury buybacks can push them down.