US Treasury Buyback Plans May Spark Dollar Debasement Trade
US Treasury's plan to double its long-end buybacks has market participants wondering what this means for the dollar and asset prices. The announcement, which is expected today, will reveal how large these operations will be.
The initial reaction to the August statement was significant, with the US dollar falling sharply and fueling big gains in crypto and precious metals. The move rekindled the dollar-debasement trade that had been active across various cohorts in markets late last year and earlier this year.
Treasury has already committed to at least doubling the maximum amount it can purchase, which would lift annualised capacity to around $144 billion. This is equivalent to approximately 15.6% of current annual gross 10-to-30-year issuance.