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The Treasury Just Admitted It… The Bond Market Is Broken

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Peter Schiff argues that the U.S. Treasury’s decision to double its buybacks of long-term bonds is a sign of panic, not strength, and that it exposes a bond market under serious stress. In his view, the government is spending taxpayer money to prop up prices of debt the market no longer wants, and the program is only the opening move in a much larger intervention.

According to Peter Schiff, the national debt topped $40 trillion, with roughly 30% of it added during Donald Trump’s presidency. He notes that long-term Treasury yields hit their highest levels in nearly nineteen years, with the 30-year above 5.3%. Peter Schiff warns that the Treasury is refinancing cheap long-dated debt, with an average coupon of about 3.44%, into shorter-term bills at higher rates. This shortens the average maturity of the debt, which is already just under six years, and makes the government more vulnerable to rising rates.

Peter Schiff expects the Federal Reserve to be forced into quantitative easing, since the Treasury’s actions undercut the Fed’s efforts to fight inflation. He contends that the market’s reaction supports his view: gold rallied about $185 and closed above $4,500, silver closed above $66, and mining stocks surged. He also points to the weaker dollar pushing oil back above $86 a barrel. Peter Schiff argues that Bitcoin’s rally looks less durable than the moves in precious metals.

Key takeaways

  • Peter Schiff calls the Treasury’s doubled long-term bond buybacks a “panic move” meant to hold down long-term rates.
  • The national debt passed $40 trillion, with about 30% added during Trump’s presidency, according to Peter Schiff.
  • Refinancing low-coupon long bonds into short-term debt shortens the debt’s maturity and raises interest costs.
  • Peter Schiff predicts the Fed will ultimately join in with a larger quantitative easing program.
  • Gold and silver rallied sharply, which Peter Schiff reads as a bullish signal for precious metals.
  • Peter Schiff views the Treasury action as undermining the Fed’s inflation fight and weakening the dollar.
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Peter Schiff breaks down the Treasury’s panic move to rescue the bond market, the $40 trillion debt milestone, and gold’s $185 reversal day.
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The Treasury just doubled its bond buybacks. Peter Schiff says that’s the government admitting the bond market is broken.
On the same day the national debt topped $40 trillion, the Treasury announced it is doubling its long-term bond buybacks from $2 billion to $4 billion… buying the bonds everybody else is selling, and funding it by issuing more short-term debt. Peter calls it what it is: a panic move, a Hail Mary to suppress rising yields after the 30-year hit 5.3%, its highest in over 19 years. Refinancing debt locked in at a 3.44% average coupon with 4% T-bills makes no financial sense, which is exactly why it’s happening… the government is scared, not stupid.
The market rendered its verdict immediately. Gold reversed off a $185 rally to close above $4,500, silver cleared $66, and the miners surged 8-12%, while hawkish FOMC minutes were shrugged off entirely. Peter explains why this Treasury version of Operation Twist forces the Fed to follow with real QE… a program that will have to dwarf 2008’s… why Bitcoin’s pop above $70,000 is built on hope, and why the housing data shows the panic is justified.
Chapters:
00:00 Treasury Panic Move
01:05 Bond Yields Hit New Highs
02:58 Debt Explosion Politics
07:00 Treasury Buyback Twist
10:23 QE Next And Fed Cornered
16:04 Hawkish Minutes Gold Surge
24:03 Markets React Unevenly
24:20 Dollar Drops Oil Jumps
25:08 Fed Inflation Bind
26:30 Debt Era Comparison
27:40 Jobs Data Media Spin
29:17 Bitcoin Versus Metals
31:19 Housing Slump Mortgages
33:59 Tariffs Canada Trade
37:50 Buybacks Won’t Work
42:26 QE Addiction Ahead
44:34 Boat Update Farewell
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