Bond Market Turmoil Drives Up Bitcoin, Gold Prices Amid Dollar Concerns
The prices of Bitcoin and gold have surged in recent days as investors respond to turmoil in the bond market and concerns about the value of the U.S. dollar.
The Treasury Department announced last week it would soon double the maximum size of its bond buyback from $2 billion to $4 billion using its general account, aiming to limit the rise of long-term government bond yields to minimize borrowing costs.
Bond prices move in opposing directions, meaning higher demand from the Treasury's bond purchases can move prices higher and push yields lower. Yields have dipped since the announcement last week, but there are questions about how long the buyback effects will last.
Russell Rhoads, a clinical associate professor of financial management at Indiana University's Kelley School of Business, said 'They're trying to influence the long end, but they're doing it with a drop in the bucket.' A few billion dollars isn't going to get you very far in a market that's the size is in trillions.