The US Treasury Department announced last week it would double the maximum single-purchase limit for long-term bond buybacks to $4 billion, in an attempt to soothe the persistently pressured bond market. However, this policy has failed to effectively reduce bond yields, and instead triggered a significant rally in hard assets such as Bitcoin and gold.

On August 19, US Treasury Secretary Scott Bessent announced that the single-repurchase cap for 10-year, 20-year, and 30-year Treasury bonds would be raised from $2 billion to at least $4 billion. This move comes as long-term Treasury yields hover near their highest levels since 2007, posing a dual challenge to fiscal management and risk assets.

Market reaction was swift and almost entirely concentrated in the hard-asset sector. Bitcoin prices spiked immediately, briefly approaching $80,000, driving a broad uptick in the cryptocurrency market and triggering the liquidation of billions of dollars in short positions; gold prices rose in tandem. Analysts noted that the policy clearly signals official anxiety over persistently rising long-term financing costs, with market expectations of more aggressive liquidity-easing measures to come, directly benefiting hard assets.

However, the core target of the policy—bond yields—has not seen a substantial decline. Data shows the 30-year Treasury yield remains at approximately 5.25%, above the intraday low of 5.19% on August 19, and close to the highest level since 2007 at 5.33% recorded on August 18; the 10-year and 2-year Treasury yields followed a similar pattern. Analysts believe the fundamental forces driving yields higher stem from the total US federal debt surpassing the $40 trillion mark, coupled with fiscal deficit expectations implying more bond issuance in the future, which would increase supply, depress prices, and lift yields—factors largely beyond Bessent's control.

Market observers point out that relative to the massive debt scale, a $4 billion buyback program is akin to a drop in the bucket, unlikely to effectively suppress yields. Ole Hansen, Head of Commodity Strategy at Saxo Bank, stated that the rapid rebound in yields underscores market concerns—that buybacks may only provide temporary liquidity support but cannot resolve the core fiscal and inflation risks driving up term premiums.

Additionally, with Middle East geopolitical conflicts showing no signs of abating, rising oil prices have intensified inflation concerns, further pressuring the bond market. The current market focus is on whether persistently high Treasury yields will eventually curb further gains in Bitcoin and gold. From a traditional logic standpoint, high yields on US Treasuries as safe-haven assets typically lead to capital outflows from non-yielding assets like Bitcoin and gold.

But analysts argue there are two key differences in the current situation. First, the Treasury's own actions indicate deep unease about rising yields; if yields remain stubbornly high, it actually strengthens expectations for more forceful interventions down the line. Second, the primary drivers of rising yields are debt and inflation concerns rather than economic strength, which paradoxically supports hard assets like gold and Bitcoin.

Robin Brooks, Senior Fellow at the Brookings Institution and former Chief Economist at the Institute of International Finance, pointed out that markets are closely watching whether governments with high debt levels attempt to manipulate yield curves, noting that even minimal policy adjustments could trigger capital flight. He stated that we have now entered an era of "currency debasement," where "debasement" refers to governments suppressing their currency's value to dilute debt burdens—effectively an indirect tax on savers—thereby driving capital flows toward hard assets such as gold and Bitcoin as hedging instruments.