A Temporary Bid for the Long End
Treasury buybacks can repair liquidity. They cannot repair the fiscal path.
The Federal Reserve is maintaining a restrictive policy stance while the Treasury expands buybacks in longer-dated securities. This letter separates monetary policy from debt-management operations and examines whether Treasury buybacks can improve market functioning without resolving the structural fiscal imbalance. It also assesses real term premia, energy risks involving Iran, marginal Treasury demand from China and Japan, and the implications for gold and Bitcoin.