According to Woofun AI, the US Treasury intervened in the repurchase of treasury bonds on a scale of 6 billion US dollars to try to calm the fluctuations in the bond market, but it was sold off by the market, causing yields to rise instead of falling.
The scale of this operation is about 3 times the normal level, setting the largest record in many years, but the essence is that the Ministry of Finance only takes on old debts with poor liquidity from traders through additional short-term loan financing. It is neither repayment of 40 trillion US dollars of national debt, nor quantitative easing by the central bank. Mark Spindel, chief investment officer at Potomac River Capital, pointed out that this is quite different from Hank Powell's “bazooka” firepower using congressional legislation in 2008; current Treasury Secretary Scott Bessent lacks support for such legislation.
Woofun AI collated data and showed that this mechanism, which only relies on cash replacement, makes scale a key variable in determining market confidence.
On August 19, Bezent promised to at least double the standard $2 billion repurchase scale. Traders expected it to reach $8 billion or even $10 billion. Ultimately, the $6 billion landing was viewed as a bluff. The 10-year US Treasury yield rose to 4.84%, and the 30-year US Treasury yield rose 5 basis points to 5.307%, once again crossing the critical threshold (1 basis point equals 0.01 percentage points). The performance of hard assets was divided, with gold hovering around $4407 per ounce; Bitcoin (BTC) dropped by $78,000 when yields soared, then rebounded to $79084. This is in stark contrast to similar announcements three weeks ago, which led to a rise in both assets.
Washington tried to buy its own debt to lower the cost of financing, but it backfired. Long-term bonds have just emerged from their worst decade since 1803, and Pantera Capital's Dan Morehead had previously warned that the plan wasn't working. Stanley Druckenmiller, who coached Bezent, said bluntly that the government will eventually fail in fighting fundamentals to defend prices. The repurchase window on Thursday lasts only 20 minutes and will close at 2 p.m. EST. This assertion will be verified if the $6 billion is exhausted and yields continue to rise.