With the expansion of the United States Treasury's long-term bond buy-back, the market dispute over this operation rose. The billionaire investor Stanley Drukken Miller said that the high rate of return at the long end reflected deficits, borrowing and inflationary pressures, and that administrative intervention could hardly be a substitute for fiscal contraction.

Increase in long-debt buy-back since September

The United States Department of the Treasury will increase the scale of liquidity support buy-backs for 10 to 30-year-old national debt from 9 September. The single operating cap will be raised from $2 billion to at least $4 billion.

The Minister of Finance, Scott Besent, defined this arrangement as a liquidity tool rather than a policy instrument that directly depressed the rate of return. However, the market is concerned that in a context where federal debt has exceeded $40 trillion, such operations can only provide short-term support and make it difficult to change investors ' judgements about fiscal prospects.

Long-end returns are still high.

Following the policy, the rate of return on United States debt fell once, but rebounded quickly. On 20 August, the annual US debt return of 30 years was about 5.24 per cent, which had previously risen to about 19 years;10 the annual US debt return was close to 4.70 per cent.

  • 30 Annual United States debt return of about 5.24 per cent
  • 10 Annual United States debt return close to 4.70 per cent
  • US federal debt has exceeded $40 trillion.

According to Drukken Miller, maintaining a high long-term rate of return suggests that market concerns remain debt and deficit per se, rather than short-term technical operations. Policy-level constraints on fiscal risk can also be reduced if Governments weaken price signals through buy-backs.

U.S. dollar is affected in step with risk assets

Increases in long-term interest rates will push up mortgages and corporate finance costs and will compress stock valuations. At the same time, the increase in the term premium means that the long-term rate of return is likely to remain at a high level, even if the market expects future interest rates to fall.

In the early days of the policy message, lower rates of return led to a rebound in the stock market, and the weakening of the United States dollar supported the performance of gold and bitcoin. However, as long-term interest rates resumed high, the market re-focused on US debt expansion and fiscal deficit pressures.

This also means that the market effects of bond buy-backs are more likely to remain at the level of short-term liquidity than to change the long-term pricing logic. For the encryption market, Bitcoin has recently benefited from the fall in the dollar, but the subsequent trend is still influenced by the return on US debt and macro-risk bias.