Treasury Buyback Ignites Rally in Bitcoin and Precious Metals

The US Treasury's announcement to double its liquidity-support buyback operations for longer-dated nominal coupon securities ignited a rally in Bitcoin and precious metals, while Treasuries round-tripped. The move, effective September 9 through November 4, saw nominal 10-year and 30-year yields fall 6-9 basis points on the announcement itself. This led to a sharp increase in Bitcoin, with BTCQ26 gaining +22.73% to $77,570, its best week since 2023, amplified by more than $3 billion in short-position liquidations.

The debasement trade, which favors dollar weakness and higher nominal yields, saw precious metals surge along with Bitcoin. Gold gained +5.30% to $4,629.50, while silver rose +6.82% to $69.76. However, 30-year REAL (TIPS) yields hit a roughly 25-year high the same week, suggesting this is a nominal-yield and dollar-weakness story rather than a falling-real-rate story.

The energy complex also saw its defining moment, with WTI crude oil gaining +6.31% to $87.16 on the supply shock caused by the Strait of Hormuz MOU lapse between Iran and the US. The diesel crack spread broke above $100 per barrel for the first time in history, trading at $102.20 on August 17-18.