Treasury Buybacks Spark Gold and Bitcoin Surge on Debt Fears

Wall Street is getting nervous about the government's checkbook again, and gold and bitcoin are drawing inflows due to investors' anxiety over the scale and expense of the federal government's budget shortfall.

Last week, the Treasury Department made an unusual move by broadening the bond buyback program's ceiling to $4 billion or more, up from a previous $2 billion cap. The plan could be partly funded through the department's General Account.

The reaction was immediate: long-dated Treasury yields surged, and the 30-year yield came close to 5.34%, a level last seen around two decades ago, compared with 4.82% in late June. This suggests bond investors saw Bessent's actions as not enough.

Stephen Coltman, who heads macro at 21Shares, said 'The size of the Treasury purchases announced so far by Bessent are trivial in comparison to the size of the overall market, but the [signaling] effect was very powerful.'