Gold, Bitcoin rally as U.S. Treasury makes unexpected bond market move

The U.S. Treasury said on Aug. 19 that it will double the amount of longer-term government bonds it buys back, from $2 billion to at least $4 billion per operation starting Sept. 9.

The move can help stabilize the bond market, push yields lower and ease some borrowing costs across the economy, including rates tied to mortgages and other loans.

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The key point is that this is not new stimulus or debt cancellation. It is a market-support measure designed to improve liquidity and reduce stress in longer-dated Treasurys. 

Long-dated Treasurys are U.S. government bonds that mature 10-30 years from now. The Treasury said it is increasing buybacks to provide "greater liquidity support" in that part of the market, with the move coming a day after a sharp bond selloff pushed the 30-year yield to its highest level since 2007. 

In the short term, that can loosen financial conditions and make risk assets, gold and Bitcoin more attractive.

Treasury said the larger buybacks will begin Sept. 9, with further guidance on future purchase sizes due at its next quarterly refunding on Nov. 4.

The announcement was followed by gains in scarce assets.