Treasury Dials Up Bond Buybacks Amid Rising Yields and Bitcoin Frenzy

The U.S. Treasury is taking steps to address rising long-term government borrowing costs by doubling its buybacks of older, less-liquid bonds. The move aims to inject demand into a fragile market and lower yields on long-dated Treasurys.

On September 9, the Treasury will begin purchasing at least $4 billion worth of bonds with maturities between 10 and 30 years. This is a significant increase from its previous cap of $2 billion per operation.

The move comes after long-dated Treasurys took a beating, with the 30-year yield reaching its highest level since 2007 at around 5.34% last week. The Treasury's actions are seen as a warning shot to traders and investors, rather than an actual implementation of yield control.

Market observers are watching bitcoin's price closely, as serious yield suppression could change the arithmetic surrounding scarce assets. Arthur Hayes predicts that bitcoin could reach 'hundreds of thousands very quickly' if YCC is implemented.