This is worth watching.
The U.S. Treasury has announced that it will at least double its buybacks of long-term government bonds — from a maximum of $2 billion to at least $4 billion per operation. The change will apply to maturities between 10 and 30 years and will begin on September 9.
It comes as the yield on the 30-year U.S. Treasury has climbed above 5.3%, reaching its highest level since 2007.
$4 billion itself isn’t a huge amount compared with the size of the U.S. Treasury market, but rising long-term yields are becoming uncomfortable enough for the Treasury to increase liquidity support in this part of the market.
For gold, it’s another reason to watch the bond market perhaps even more closely than the Fed. If long-term borrowing costs remain elevated, pressure on U.S. public finances isn’t going away anytime soon.
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