U.S. Treasury · Bitcoin · CoinDesk
The U.S. Treasury on Wednesday said it would step in to support the market for its own bonds
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The new measure doesn’t print money “out of thin air” and isn't quantitative easing (QE) or yield curve control (YCC), two of the biggest tools governments and central banks have for pumping money into markets.
Key facts
- Starting Sept. 9 and running through Nov. 4, the Treasury will buy back $4 billion or more of its own long-duration (10 to 30 years) bonds on multiple occasions, double the previous $2 billion cap
- For instance, the U.S. effectively ran a form of yield curve control from 1942 to 1951, with the Federal Reserve pegging short-term Treasury bill yields and capping longer-term bond yields to help
- That could involve a full-blown Fed YCC, with the central bank committing to buying as many bonds as required to keep yields on, say, 10-year or 30-year bonds below a specific level
- They are issuing short bonds to buy long bonds — this is Operation Twist 2.0
Summary
The Treasury will double its buybacks of long-term U.S. bonds to at least $4 billion per operation through early November, using proceeds from short-term debt rather than creating new money. Officials and analysts say the move resembles a modern “Operation Twist” and is meant to smooth bond-market liquidity, not launch quantitative easing or formal yield curve control. Though small in scale, the buybacks signal concern over elevated long-term yields and raise expectations of more aggressive measures ahead, including yield-curve control—helping fuel rallies in bitcoin and gold. The U.S. Treasury on Wednesday said it would step in to support the market for its own bonds after the cost of long-term government borrowing shot up to the highest level in almost two decades.