U.S. Treasury Raises Debt Buyback Limit, Bitcoin in Focus

On August 19, the U.S. Treasury announced that starting September 9, it will increase the buyback limit for certain Treasury securities with maturities between 10 and 30 years from $2 billion to $4 billion per operation. Meanwhile, the Federal Reserve released the minutes from its July meeting, maintaining the interest rate range at 3.50% to 3.75%. The minutes indicated that three members supported a 0.25 percentage point rate hike, while others suggested that if inflation does not decline, another increase may be necessary. In the short term, the interest rate on reserve balances is set at 3.65%, which helps keep ultra-short-term rates within the central bank's target range. Long-term yields are influenced by future interest rates, inflation expectations, and the compensation required by investors. Bitcoin is typically quick to respond to rising real yields, as this asset does not provide contractual returns. Additionally, the Treasury expects private net financing of $739 billion for tradable debt from July to September, with an additional $628 billion expected from October to December. The buyback operations alter the composition of government liabilities, potentially promoting the trading of older debt, but will not significantly change the net debt size.

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