Bessent's Debt Buyback Plan May Trigger Economic Troubles, Amid Rising Treasury Yields
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The Bridgewater Associates founder said Bessent's plan to increase government debt purchases may portend trouble for the U.S. economy. Coupled with the Japanese government reducing its U.S. bond market exposure and surging long-dated American bond yields, Dalio said investors may want to prepare their portfolios for increased risk by owning cryptocurrencies and gold.
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BloombergDalio Says Sell Bonds, Buy Gold, Bitcoin as Debt Crisis Looms Billionaire Ray Dalio said investors should reduce their bond holdings and put as much as 15% of their money in gold to hedge against the risk of a US debt crisis that he warns could be just three years away.
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The concern follows a Treasury announcement Wednesday saying it will be at least doubling the size of its typical $2 billion debt buyback, a routine operation begun in 2024 that helps provide a market for longer-dated debt.
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Epoch Times BusinessFrom Sept. 9, the Treasury will double the size of its government debt repurchases to $4 billion, focusing its buyback operations on 10- to 20-year and 20- to 30-year bonds.
FortuneThis week, he announced the Treasury would increase “by at least double” the size of buybacks for longer-dated securities—and is prepared to expand the “fiscal consolidation” of purchasing back the costlier debt.
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U.S. Treasury Secretary Scott Bessent’s big move on bonds didn’t last long. Yields on the 30-year Treasury are climbing back up to where they started on Wednesday, when Bessent announced he would double the Treasury’s purchases of long-dated bonds to at least $4 billion “per operation” in hopes of reducing their interest yield.
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MarketWatchU.S. Treasury Secretary Scott Bessent on Thursday indicated that his department could make additional moves in the wake of its announcement that it would at least double the size of its buybacks of longer-dated Treasury bonds.
CNBCThough Treasury Secretary Scott Bessent insisted the move wasn't an attempt to tamp down yields, it came after the 10- and 30-year Treasurys hit levels not seen since prior to the global financial crisis in 2008.
Common DreamsWhile the announcement did result in interest rates for US treasuries dropping, economists and other political observers are warning that Treasury Secretary Scott Bessent's scheme to stop spiking yields will prove ineffective over the long term.
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The jump in yield has been tied to a number of factors, inflation fears prominent among them. Treasurys also have been forced to compete against higher-yielding government debt in Asia and Europe, a record-setting surge of issuance from hyperscalers investing in artificial intelligence, and a general rise in term premiums, or the extra yield investors demand for holding U.S. debt, which surpassed the $40 trillion mark this week.
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Epoch Times BusinessA broad array of factors has pushed up yields, including persistent war-driven inflation fears, fiscal worries, potential monetary policy tightening, and competition from artificial intelligence-related corporate bonds.
Common DreamsExperts say that bond yields have been spiking to highs not seen since the start of the Great Recession due to investor anxiety over a number of factors, including inflation, the size of the US government's debt, and Trump's illegal war with Iran.
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The U.S. Dollar Index—a measure of the greenback against a weighted basket of currencies—continued its weakness in the middle of the trading week. The index slumped more than 0.5 percent and pared its year-to-date gain to below 1 percent.
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CNBCWhile yields rose, the dollar also weakened, continuing a trend this week that has seen the greenback lose nearly 0.9%.
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Treasury Department officials did not respond to a request for comment. The market's response ups the ante for Fed Chairman Kevin Warsh, who is scheduled to deliver his closely watched keynote on Aug. 28 at the central bank's annual symposium in Jackson Hole, Wyo.
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FortuneThe atmosphere will make life complicated for Fed Chairman Kevin Warsh next week. He is scheduled to give his annual speech at Jackson Hole. He has publicly pledged not to give “forward guidance” to the markets, because he doesn’t believe the Fed should be guiding the bond market. But the entire intent of Bessent’s intervention was to signal that the Treasury is able to stabilize yields if it wants to—a position that seems to contradict Warsh.
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Audio will be available later today. NPR's Leila Fadel speaks with Bloomberg's Stacey Vanek Smith about why the U.S. Treasury acted to push down long-term bond yields and how that relates to the ballooning U.S. debt.
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Epoch Times BusinessYields on long-term U.S. bonds fell midweek after the Treasury Department said it would expand long-end debt buybacks amid climbing rates.
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The US Treasury is buying long bonds, but not very many Speaking loudly but wielding a teeny-tiny stick in
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RealClearMarketsThe US Treasury is buying long bonds but not very many. Read Full Article »
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Bessent’s action shows a desire by the Treasury Department to have greater control over market pricing
7 details only one outlet reported
Independent claims that didn't surface elsewhere in our corpus. Treat as supplementary — not corroborated across outlets.
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01 CNBC Treasury Secretary Scott Bessent's debt buyback announcement this week fits into a broader pattern that can signal a forthcoming crisis, according to billionaire investor Ray Dalio.
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02 Epoch Times Business A Treasury buyback is when the federal government purchases its own bonds before they mature, retiring older securities and replacing them with new issuance.
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03 Financial Times Bossing the bond market around never works Despite Scott Bessent’s efforts, investors worry something is up
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04 Bloomberg Bessent’s Bond Maneuvers Giving Global Debasement Trade New Life Scott Bessent’s bid to tame US borrowing costs knocked down long-term yields for barely a day. The more lasting market signal: the dollar weakened while gold and Bitcoin rallied, reinforcing a debasement trade fueled by swelling US deficits and concerns over the direction of US economic policy.
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05 Fortune Analysts are generally nonplussed. The Japanese yen—while stronger against the dollar than in its June slump—has unwound to roughly the level it started the year at. The drift back to market-perceived fair value is “hardly surprising,” quipped UBS’s Paul Donovan.
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06 Common Dreams 5 #000000 #FFFFFF "Trump is going to pump billions of dollars into the bond market to push down interest rates through the election, then let everything fall apart again," said one critic.
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07 MarketWatch The Fed Here’s how Bessent’s newly activist Treasury Department is undercutting the Fed’s Warsh
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