🇺🇸 U.S. Treasury to Buy Back Up to $6B in Long-Term Debt

[Tungbulu]

And so I saw this news on X, that the U.S treasury is set to buy back up to $6B of about 20-30 year bonds.

I know what would be in the minds of some folks, but this isn’t the U.S Treasury buying Bitcoin, but it does raise an interesting question,

Could continued debt management and pressure in the bond market aid in strengthening the case for scarce assets like Bitcoin over the long term? Or is this simply just a normal Treasury liquidity situation/operation that has little to no relevance to Bitcoin??

[Don Pedro Dinero]

Could continued debt management and pressure in the bond market aid in strengthening the case for scarce assets like Bitcoin over the long term? Or is this simply just a normal Treasury liquidity situation/operation that has little to no relevance to Bitcoin??

The latter. What these buybacks will do is drive up the value of the bond, which means there will be more potential buyers interested in purchasing them. Furthermore, if we recall that this government promised to buy bitcoin – albeit in ‘budget-neutral ways’ – and is spending a great deal of money on this and other things, I cannot see how this could benefit the bitcoin market.

[OcTradism]

The latter. What these buybacks will do is drive up the value of the bond, which means there will be more potential buyers interested in purchasing them. Furthermore, if we recall that this government promised to buy bitcoin – albeit in ‘budget-neutral ways’ – and is spending a great deal of money on this and other things, I cannot see how this could benefit the bitcoin market.

Sum of money is the same, so if government spend money to buy bonds, they will have less money for other things like buy bitcoin but historically the USA government has never bought bitcoin.

This site https://www.worldgovernmentbonds.com/ can help us, anyone who are interesting in tracking bonds globally. It's the World Government Bonds with a lot of information like 10-y bond yield, bank rate, and more.

Even without this bond buy back from US treasury, there will still need a long time until the USA government and USA Treasury proactively buy bitcoins.

[_act_]

Could continued debt management and pressure in the bond market aid in strengthening the case for scarce assets like Bitcoin over the long term? Or is this simply just a normal Treasury liquidity situation/operation that has little to no relevance to Bitcoin??

If United States is buying back the dept, this can make the price to increase as the bond supply falls and which means the yield/interest to also fall. Because of that, people can look elsewhere for a better profit and that is where bitcoin and other valuable assets can become a good investment for them. If they invest in bitcoin, the price will increase.

[viljy]

This has nothing to do with Bitcoin. In general, all this floundering of a system drowning in debt is the agony of the existing world system, and it can only have a short‑term impact on Bitcoin. In the future, Bitcoin will definitely have its place. And here’s why: in a neo‑feudal future, there will be no inflation, no loans (no interest on loans).

In other words, it will be impossible to earn money by selling time, because the very mode of production (the way of obtaining surplus value) will change. Human labor will no longer be the source of value (the source will be the nearly free labor of robots controlled by AI).

The concepts of "commodity" and "market" will also disappear. So what will be the source of value then? - Control over something (space, land, water, the internet, etc.). Bitcoin fits perfectly into such a system, either as a means of payment or as a reserve asset. So, Bitcoin may well outlast the dollar (and other national currencies).

[Opiate32]

Could continued debt management and pressure in the bond market aid in strengthening the case for scarce assets like Bitcoin over the long term? Or is this simply just a normal Treasury liquidity situation/operation that has little to no relevance to Bitcoin??

Possibly but maybe not for the reason people first think. If the treasury keeps buying long term debt to support liquidity while replacing some of that borrowing with short term debt, it isn’t really reducing the debt problem, it’s basically changing how the debt is managed.
Then what happens when people start questioning how sustainable that kind of debt management can be over the long term. That’s where scarce asset could become more attractive.

I wouldn’t say this buyback alone is bullish for bitcoin. What matters more is whether this kind of thing eventually makes people lose confidence in the traditional places they use to store there wealth.

[Floczy]

I know what would be in the minds of some folks, but this isn’t the U.S Treasury buying Bitcoin, but it does raise an interesting question,

Could continued debt management and pressure in the bond market aid in strengthening the case for scarce assets like Bitcoin over the long term? Or is this simply just a normal Treasury liquidity situation/operation that has little to no relevance to Bitcoin??

Just buying bonds doesn't really have any effect on Bitcoin, it's only in serious cases where government might really demand more and could cause increase in interest rates.
Think of it like a way to attract investors to buy bonds, higher interest rates could make bonds look attractive as the yield will give more profits. And of course higher interest rates will most times affect Bitcoin in the negative way

[slaman29]

Could continued debt management and pressure in the bond market aid in strengthening the case for scarce assets like Bitcoin over the long term? Or is this simply just a normal Treasury liquidity situation/operation that has little to no relevance to Bitcoin??

The latter. What these buybacks will do is drive up the value of the bond, which means there will be more potential buyers interested in purchasing them. Furthermore, if we recall that this government promised to buy bitcoin – albeit in ‘budget-neutral ways’ – and is spending a great deal of money on this and other things, I cannot see how this could benefit the bitcoin market.

When in doubt, just assume that it has nothing to do with Bitcoin and will have no effect, you'll generally be right in the end

In fact, this helps US dollar more and if BTC has any effect it will be because of stronger USD. Which, by the way, I think is getting weaker in the last 10 years, everything they do to keep it up doesn't last. This one also won't, after temporary boost.

Long term effect of all this? People understand it is unsustainable. But reality? People should know by now. Strangely they don't care.

[Haunebu]

We are already experiencing a cool bull run by BTC these days and it doesn't really these sort of moves to keep surging ahead in my opinion. The US treasury is just trying to make bonds more attractive, but this most probably won't achieve that.

Why? Thanks to the rumoured multiple FED rate cuts in the upcoming months primarily which is stressing out investors.

[pooya87]

It's like the altcoin market, they start hyping up their shitcoins (ie. the bonds) to convince the gullible buyers that what they're selling is worth investing into. That way they get some funds to flow in and keep the "shitcoin" alive a little longer.

Historically this has led to money exiting other markets and going into the bonds, but I think considering the way the US regime is losing trust, they have not been able to produce that much hype therefore they have not been able to pull as much capital from other markets as they once did. So the negative effects on bitcoin (and other markets) should be small or maybe even negligible!

Long term this is a massively negative news. The US debt is rising rapidly and the speed of that rise is increasing exponentially. That is weakening the US dollar which means price of everything goes up against it and that includes bitcoin.
We have a massive rise coming in the near future for bitcoin

[Fortify]

And so I saw this news on X, that the U.S treasury is set to buy back up to $6B of about 20-30 year bonds.

I know what would be in the minds of some folks, but this isn’t the U.S Treasury buying Bitcoin, but it does raise an interesting question,

Could continued debt management and pressure in the bond market aid in strengthening the case for scarce assets like Bitcoin over the long term? Or is this simply just a normal Treasury liquidity situation/operation that has little to no relevance to Bitcoin??

Your post is missing a crucial part. It implies that the government is paying down debt, but that's incorrect. What they're doing is in complete panic because of their constant and severe mismanagement of the economy. The debt pile has got far bigger under Trumps "leadership". Anyway, they are swapping these long dated securities which historically have been sold at higher rates in return for shorter dated 10 year treasuries. It's effectively just an illusion, like moving the deckchairs around on the titanic. Not actually improving the situation but actually showing how desperate they are right now and causing bigger problems down the line - a mess that Donald trump will never see because the old man will be dead or bathing in the billions he's already plundered

[Tungbulu]

Your post is missing a crucial part. It implies that the government is paying down debt, but that's incorrect. What they're doing is in complete panic because of their constant and severe mismanagement of the economy. The debt pile has got far bigger under Trumps "leadership". Anyway, they are swapping these long dated securities which historically have been sold at higher rates in return for shorter dated 10 year treasuries. It's effectively just an illusion, like moving the deckchairs around on the titanic. Not actually improving the situation but actually showing how desperate they are right now and causing bigger problems down the line - a mess that Donald trump will never see because the old man will be dead or bathing in the billions he's already plundered

And one intriguing part is that the buybacks are relatively small compared with the overall debt. Treasury itself says that they only have a limited effect on the debt’s maturity and that they are mainly supposed to support market liquidity. So I pretty much don’t see the buybacks as an actual solution. And I believe the bigger question should be whether these measures can actually keep working as the government borrowing continues to grow. And this is pretty much where the long term Bitcoin argument starts getting interesting.

[BlackHatCoiner]

$6B against $40T of debt is basically pennies.

The interesting part isn't the buyback, it's why they upsized it. They doubled the long-end operations last month after 30-year yields hit their highest level since 2007. When the issuer has to step in and buy back its own 30-year paper because buyers are getting picky, that says something about appetite for fiat IOUs.

[Cookdata]

I know what would be in the minds of some folks, but this isn’t the U.S Treasury buying Bitcoin, but it does raise an interesting question,

Could continued debt management and pressure in the bond market aid in strengthening the case for scarce assets like Bitcoin over the long term? Or is this simply just a normal Treasury liquidity situation/operation that has little to no relevance to Bitcoin??

Just buying bonds doesn't really have any effect on Bitcoin, it's only in serious cases where government might really demand more and could cause increase in interest rates.
Think of it like a way to attract investors to buy bonds, higher interest rates could make bonds look attractive as the yield will give more profits. And of course higher interest rates will most times affect Bitcoin in the negative way

I'm trying to figure out how increased interest rates are going to encourage buying bonds. If the Fed increases interest, that means people will be discourgate to borrow money to buy bonds, even if the bond looks interesting, there are no benefits of buying back here.

Why should investors want to borrow money with an increased  interest rate when they will be buying bond at higher price when the yield is even the same? It doesn't make sense in my opinion.

If the bond prices look good, some investors are going to sell and will want to diversify their investment into other assets, this is where I think Bitcoin will benefit with some inflow of money. Most will like to keep their money in Bitcoin with hope that after the buy back is complete, they will go back to bond. Some might leave their investments in Bitcoin but all of these depend on the outcome of the buy back.

[Floczy]

Just buying bonds doesn't really have any effect on Bitcoin, it's only in serious cases where government might really demand more and could cause increase in interest rates.
Think of it like a way to attract investors to buy bonds, higher interest rates could make bonds look attractive as the yield will give more profits. And of course higher interest rates will most times affect Bitcoin in the negative way

I'm trying to figure out how increased interest rates are going to encourage buying bonds. If the Fed increases interest, that means people will be discourgate to borrow money to buy bonds, even if the bond looks interesting, there are no benefits of buying back here.

It's all about perspective.
You know if one has available money he and Intrest rates are higher, it will make bonds and any other similar investments look attractive, because yields will be higher. At the same time borrowing money gets more expensive as well, but individuals do not always have to borrow money to invest especially in investments like bonds.

[WhoYouCantKill]

$6B against $40T of debt is basically pennies.

The interesting part isn't the buyback, it's why they upsized it. They doubled the long-end operations last month after 30-year yields hit their highest level since 2007. When the issuer has to step in and buy back its own 30-year paper because buyers are getting picky, that says something about appetite for fiat IOUs.

This is the part that interests me the most too. The size of the buyback itself isn’t as much important as to what really prompted treasury to actually increase the operation. If the demand for long term Treasuries is actually becoming weaker, then the government would have to a lot more to keep that aspect of the market functioning. And even though this may actually not affect Bitcoin in any way, but it does raise some questions about how investors would view traditional stores of value if the pressure persists.

[X-ray]

We are already experiencing a cool bull run by BTC these days and it doesn't really these sort of moves to keep surging ahead in my opinion. The US treasury is just trying to make bonds more attractive, but this most probably won't achieve that.

Why? Thanks to the rumoured multiple FED rate cuts in the upcoming months primarily which is stressing out investors.

Actually the FED is expected to hike the interest rate in the upcoming months, the FED is concerned about the inflation and it could possibly impact risk asset.

It's confirmed by John Williams himself here and high chance it'll take place by the end of the year and Anna Paulson also said there will be upcoming tightening because the inflation is concerning.

Rate cut probably going to be the last thing to happen considering the current situation.

The U.S. treasury buying the bond is doing debt swap, giving liquidity to older bond and issuing new short term bond to support liquidity.

[SamReomo]

I know what would be in the minds of some folks, but this isn’t the U.S Treasury buying Bitcoin, but it does raise an interesting question,

If I get it right then buyback of bonds will reduce the interest rate of the bonds and those who have invested in such bonds will get less interest from the bonds as the buyback will increase the value of the bonds and if bonds value increase then interest rate will go down.

Many investors will sell their bonds for higher value to book profit so they can invest that money into other assets that could offer them better yields than those bonds. The asset most of such investors will choose might be Bitcoin and thus it'll help Bitcoin to gain value because investors will choose it over the bonds.

[Fiatless]

I'm trying to figure out how increased interest rates are going to encourage buying bonds. If the Fed increases interest, that means people will be discourgate to borrow money to buy bonds, even if the bond looks interesting, there are no benefits of buying back here.

When interest rates rise, existing bonds lose value. New bonds then offer higher coupon rates and become more attractive to investors. Older bonds with lower interest rates then have to trade lower so their yield becomes competitive again.

The government knows how to control the economy by encouraging the people to buy back bonds. They simply increase the interest on new bonds, making it more attractive for people to reinvest.

Many investors will sell their bonds for higher value to book profit so they can invest that money into other assets that could offer them better yields than those bonds. The asset most of such investors will choose might be Bitcoin and thus it'll help Bitcoin to gain value because investors will choose it over the bonds.

With the recent interest rate hike and projections of further increases, investors will be cautious. They will focus more on less risky assets, and Bitcoin is not in that category yet. Investors will choose newly issued bonds since they have higher interest rates and are safe.

[Swordsoffreedom]

First off, we gotta make a clear distinction that this isn't QE, and the buyback size here is tiny compared to the whole US Treasury market.

More importantly, even after they tripled the size of the buyback, 10Y and 30Y Treasury yields are still hitting peaks. Not to mention, Scott Bessent also made it pretty clear earlier that the goal of the buyback is to support market liquidity, not push rates lower or change the underlying pricing of Treasuries.

So I'm not really convinced this buyback is gonna have any major impact on Bitcoin, or cause any meaningful change in financial markets more broadly.

https://www.xtb.com/sca-en/market-analysis/news-and-research/treasury-triples-bond-buybacks-but-yields-keep-rising-tnote-at-its-highest-since-november-2023