The 'debasement trade' returns after Bessent bond maneuver. Crypto and gold are back in style
Concern over the size and the cost of U.S. government spending has given new life to the debasement trade.
The U.S. Treasury is grappling with growing national debt totaling $40 trillion and seeking to ease market concerns by purchasing $4 billion in bonds, then reissuing them under different terms. JPMorgan's James Sullivan likened this strategy to "paying your mortgage with your credit card," arguing that it only provides a short-term solution that defers the underlying debt issue.
The Treasury's move has already influenced the yield on 30-year treasuries, though the effect may be temporary, potentially contributing to higher borrowing costs and inflation.
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