US Treasury Announces Plan to Buy More Government Bonds, Triggers Gold Price Drop
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After Treasury Secretary Scott Bessent announced on Wednesday the Treasury would be doubling its buybacks of government bonds in the 10-30 year tenor, the gold price ripped 3% to the $4,550 an ounce level. The Van Eck Gold Miners exchange-traded fund GDX spiked more than 9%.
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BloombergTreasury Buyback Gives Gold Another Lease of Life, UBS Says UBS Chief Strategist Bhanu Baweja discusses Treasury Secretary Scott Bessent’s plan to increase buybacks of longer-dated debt and its impact on wider markets including currencies and gold. "The fact that they want to keep long-end yields in check probably gives another lease of life to the gold trade," Baweja tells Bloomberg Television. (Source: Bloomberg)
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US Treasury to double buybacks of long-term government debt Sharp sell-off in recent weeks has sent borrowing costs soaring
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CNBCThe Treasury Department on Wednesday said it would increase its buybacks of long-term Treasury debt, raising the maximum it will buy from $2 billion to at least $4 billion. The intervention had the effect of stemming a sell-off in the Treasury market that has pushed up yields to uncomfortable levels in recent days. The selloff had dominated global headlines as investors worried that rising Treasury yields would worsen an affordability crisis for consumers, complicate businesses' borrowing plans, threaten stock-market gains and make it more expensive for the government to finance its burgeoning debt.
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.
MarketWatchThe effect of a debt buyback can be to push prices higher and yields lower The Treasury Department said Wednesday that it will more than double the size of government-debt buybacks, sending yields sharply lower and stocks higher at the market open.
Common DreamsThe Trump administration on Wednesday unveiled a plan to ease upward pressure on the cost of US debt by doubling its bond buybacks through November.
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Yields 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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NPR EconomyAudio 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.
CNBCThe buybacks follow two other recent steps that have also effectively stemmed the rise in long-term Treasury yields.
BBC BusinessPublished Long-term borrowing costs in the US eased on Wednesday after the Treasury department announced it would buy back more debt.
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The recent surge in bond yields has been driven by rising oil prices caused by the US-Iran war, with investors concerned over inflation.
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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.
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.
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In announcing that it will buy back "at least" $4 billion worth of bonds over a two-month period, the US Department of Treasury said it was seeking "to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants."
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BBC BusinessThe Treasury Department said its intervention reflected its "desire to provide greater liquidity support" for longer-term bonds.
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While 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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CNBCTreasury Secretary Scott Bessent is in the midst of a historic effort to tamp down long-term Treasury yields. He may also be complicating the work of his counterpart at the Federal Reserve, Chairman Kevin Warsh.
6 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 MarketWatch Bullion’s price reaction to capping long bond yields was immediately positive Since troughing around $4000 per ounce at the end of July, the price of gold had been recovering steadily.
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02 Bloomberg Scott Bessent Is Moving Markets Everywhere, With a Lot at Stake Currencies, gold and Bitcoin prices all reacted to Bessent’s bond buyback gambit.
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03 BBC Business The move came after the interest rate on 30-year bonds, which are a type of debt used to raise funds from investors, hit 5.34% on Tuesday - the highest level in almost 20 years.
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04 CNBC Bond yields edged higher on Thursday morning after pulling back sharply during the previous session following the Treasury Department's move to dramatically ramp up government debt repurchases in a bid to shore up longer-dated debt.
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05 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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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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Sources (8)
- bbc-biz
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- marketwatch
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- commondreams
- npr-economy
- bloomberg