--- title: "US Treasury Secretary's Effort to Lower Treasury Yields Ignites \"Currency Devaluation Trade\"! Gold Hits Three-Month High, Bitcoin Surges Over 25% in a Week" type: "News" locale: "en" url: "https://longbridge.com/en/news/296657919.md" description: "Following Bessent's announcement to expand US long-term bond buybacks, Treasury yields briefly dipped before returning to high levels, but thoroughly ignited the \"currency devaluation trade\"—gold hit a three-month high, and Bitcoin surged over 25% in a single week. Market concerns about the credibility of the US dollar are heating up, but some analysts point out that money creation is the Federal Reserve's prerogative, casting doubt on the sustainability of this devaluation trade" datetime: "2026-08-22T00:58:08.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/296657919.md) - [en](https://longbridge.com/en/news/296657919.md) - [zh-HK](https://longbridge.com/zh-HK/news/296657919.md) generator: "portal-rs" --- # US Treasury Secretary's Effort to Lower Treasury Yields Ignites "Currency Devaluation Trade"! Gold Hits Three-Month High, Bitcoin Surges Over 25% in a Week US Treasury Secretary Bessent's efforts to suppress long-end US Treasury yields had a direct impact on the market for less than a day. **However, this move weakened the US dollar, while both gold and Bitcoin rose—strengthening the logic of the "currency devaluation trade," driven by the expanding US fiscal deficit and deep-seated market concerns about the direction of US economic policy.** After announcing the expansion of buybacks, Bessent stated in an interview that the market had "overreacted slightly" and emphasized that the Treasury Department possesses a "powerful toolkit." **However, long-end US Treasury yields only fell briefly before coming under pressure again, remaining basically flat for the week. Meanwhile, Bitcoin rose more than 25% this week, breaking through $78,000, while gold climbed to a three-month high.** This market reaction reveals a deeper dilemma in Washington: the US government hopes to lower financing costs, but inflation continues to constrain the Federal Reserve. At the same time, governments and corporations around the world are increasingly fiercely competing for capital—from large-scale fiscal borrowing to massive financing demands in the artificial intelligence sector—meaning the upward pressure on long-end interest rates has not structurally dissipated. ## Fiscal Intervention Struggles to Resolve Structural Contradictions Charlie McElligott of Nomura Securities characterized this week's combination of rising gold, a falling US dollar, and strengthening Bitcoin as a **"pressure relief valve"—as US authorities attempted to stabilize long-end interest rates, market anxiety was vented elsewhere.** Barclays strategists believe that the US dollar was the "biggest loser" in this yield-suppression effort, as fiscal concerns reignited the market's safe-haven demand for gold. **The 90-day correlation between Bitcoin and gold is currently at its highest level since the pandemic, further reinforcing the narrative of cryptocurrency as a "devaluation hedge"**—although this week's rise in the crypto market also had its own specific catalysts. Nathan Thooft, Senior Portfolio Manager at Manulife Investment Management, pointed out: "The Treasury Department can influence liquidity and market sentiment, but it cannot continuously suppress fundamental forces such as economic growth, inflation, deficits, and supply." The US government's current fiscal deficit is approaching $2 trillion, rising oil prices are exacerbating inflation risks, and governments worldwide are continuing to expand their debt scales for defense, energy, and social spending. Barclays strategists also noted that the scale of corporate bond issuance is constantly rising—especially as mega-cap technology companies finance AI investments—creating additional pressure on long-end interest rates. The conclusion is: the Treasury Department can adjust duration supply, but it cannot eliminate the demand for capital. ## AI Investment Boom Intensifies Capital Competition The artificial intelligence boom plays a dual role in this competition for capital: on one hand, financing for AI has created huge demand in the bond market; on the other hand, investors' expectations of high returns from AI are supporting stock resilience against the backdrop of rising financing costs. In an interview on Thursday, Bessent expressed clear dissatisfaction with the borrowing behavior of AI companies, stating that their debt issuance strategies were "almost insensitive to yields because they believe the returns from AI construction will be extremely lucrative and do not care about the interest rates they pay." Priya Misra, Portfolio Manager at J.P. Morgan Asset Management, stated, "The global competition for capital is driving up equity discount rates—from governments financing defense, energy security, and social projects, to the financing needs of the entire AI ecosystem." Florian Ielpo of Lombard Odier believes that the key figure supporting the stock market is not the Treasury Department's buyback operations in the billions of dollars, but rather "a 20% earnings surprise in 2026." This partly explains why the stock market has largely "turned a blind eye" to Bessent's maneuvers and the renewed pressure in the bond market. ## 5% Becomes Key Watershed for Long-End Yields Despite the resilience shown by the stock market, US Treasury yields approaching the 5% level are becoming competitive pressure that highly valued stocks can increasingly not ignore. Michael Hartnett, strategist at Bank of America, views the 5% level for 30-year US Treasury yields as an important dividing line, believing that failure to break below this threshold will exacerbate pressure on the US dollar and highly leveraged sectors—including AI mega-cap computing power enterprises and private credit. On Friday, **Ray Dalio, founder of Bridgewater Associates, issued a sterner warning to the market, advising investors to reduce bond exposure and hold gold and some Bitcoin to guard against a potential US debt crisis.** Misra also pointed out that the speed at which the market digests policy disturbances is accelerating: "The market is increasingly downplaying policy changes because there is a certain expectation of 'stock market protection' from this administration—whenever risk assets or the bond market experience turmoil, we repeatedly see Trump or the Treasury Department step in to intervene." ## Doubts Remain on Whether the Devaluation Trade Can Be Sustained The advantage of the devaluation trade over bonds lies in its more attractive narrative logic. However, the market is divided on whether this trade can be sustained. Brent Donnelly, President of Spectra Markets, initially interpreted Bessent's announcement as a signal to buy Bitcoin and short the US dollar against the Swiss franc. However, the fact that the buyback scale is negligible relative to the entire US Treasury market caused him to subsequently waver. **"I believe that the intense volatility in the US dollar, gold, and Bitcoin is likely to cool down significantly from here," he stated. "Bessent's actions have reinforced structural themes, but these themes are not new, and there are no immediate catalysts to trigger the next round of gains in the devaluation trade."** At a deeper institutional level, the tension between the Treasury Department and the Federal Reserve cannot be ignored. **The Treasury Department can adjust the volume and maturity structure of bond issuances, but it cannot create money out of thin air—that is the power of the Federal Reserve.** However, Federal Reserve Chair Powell emphasized the need to reduce the central bank's intervention in the market, leaving Washington facing the reality that resilient economic growth, persistent inflation, and large-scale capital expenditures are jointly pushing up interest rates, even as it hopes to lower borrowing costs. Market movements next week may further test this tension: Nvidia's earnings report will reveal whether AI company profits can continue to support the stock market, and at the Jackson Hole symposium, investors will closely watch whether the Federal Reserve tends to align with Washington on loose financial conditions. ### Related Stocks - [GBTC.US](https://longbridge.com/en/quote/GBTC.US.md) - [GLD.US](https://longbridge.com/en/quote/GLD.US.md) - [IBIT.US](https://longbridge.com/en/quote/IBIT.US.md) - [GLDW.US](https://longbridge.com/en/quote/GLDW.US.md) - [FBTC.US](https://longbridge.com/en/quote/FBTC.US.md) - [GLDM.US](https://longbridge.com/en/quote/GLDM.US.md) - [IAU.US](https://longbridge.com/en/quote/IAU.US.md) - [UGL.US](https://longbridge.com/en/quote/UGL.US.md) - [BITB.US](https://longbridge.com/en/quote/BITB.US.md) - [ARKB.US](https://longbridge.com/en/quote/ARKB.US.md) - [SGOL.US](https://longbridge.com/en/quote/SGOL.US.md) - [BITO.US](https://longbridge.com/en/quote/BITO.US.md) - [BRRR.US](https://longbridge.com/en/quote/BRRR.US.md) - [BTCO.US](https://longbridge.com/en/quote/BTCO.US.md) - [BTCW.US](https://longbridge.com/en/quote/BTCW.US.md) - [HODL.US](https://longbridge.com/en/quote/HODL.US.md) - [EZBC.US](https://longbridge.com/en/quote/EZBC.US.md) - [03008.HK](https://longbridge.com/en/quote/03008.HK.md) - [03042.HK](https://longbridge.com/en/quote/03042.HK.md) - [03430.HK](https://longbridge.com/en/quote/03430.HK.md) - [518850.CN](https://longbridge.com/en/quote/518850.CN.md) - [GOLD.AU](https://longbridge.com/en/quote/GOLD.AU.md) - [BTCE.DE](https://longbridge.com/en/quote/BTCE.DE.md) - [NMR.US](https://longbridge.com/en/quote/NMR.US.md) - [8604.JP](https://longbridge.com/en/quote/8604.JP.md) - [BCS.US](https://longbridge.com/en/quote/BCS.US.md) - [BARC.UK](https://longbridge.com/en/quote/BARC.UK.md) - [MFC.US](https://longbridge.com/en/quote/MFC.US.md) - [JPM.US](https://longbridge.com/en/quote/JPM.US.md) - [BAC.US](https://longbridge.com/en/quote/BAC.US.md) - [NVDA.US](https://longbridge.com/en/quote/NVDA.US.md) - [JPM-M.US](https://longbridge.com/en/quote/JPM-M.US.md) - [JPM-C.US](https://longbridge.com/en/quote/JPM-C.US.md) - [JPM-D.US](https://longbridge.com/en/quote/JPM-D.US.md) - [JPM-L.US](https://longbridge.com/en/quote/JPM-L.US.md) - [8634.JP](https://longbridge.com/en/quote/8634.JP.md) - [JPM-K.US](https://longbridge.com/en/quote/JPM-K.US.md) - [JPM-J.US](https://longbridge.com/en/quote/JPM-J.US.md) - [BAC-Q.US](https://longbridge.com/en/quote/BAC-Q.US.md) - [BML-L.US](https://longbridge.com/en/quote/BML-L.US.md) - [BAC-L.US](https://longbridge.com/en/quote/BAC-L.US.md) - [BAC-K.US](https://longbridge.com/en/quote/BAC-K.US.md) - [BML-H.US](https://longbridge.com/en/quote/BML-H.US.md) - [BAC-N.US](https://longbridge.com/en/quote/BAC-N.US.md) - [BAC-E.US](https://longbridge.com/en/quote/BAC-E.US.md) - [MER-K.US](https://longbridge.com/en/quote/MER-K.US.md) - [BAC-O.US](https://longbridge.com/en/quote/BAC-O.US.md) - [BML-G.US](https://longbridge.com/en/quote/BML-G.US.md) - [BAC-M.US](https://longbridge.com/en/quote/BAC-M.US.md) - [BAC-B.US](https://longbridge.com/en/quote/BAC-B.US.md) - [BML-J.US](https://longbridge.com/en/quote/BML-J.US.md) - [BAC-S.US](https://longbridge.com/en/quote/BAC-S.US.md) - [BAC-P.US](https://longbridge.com/en/quote/BAC-P.US.md) - [8648.JP](https://longbridge.com/en/quote/8648.JP.md) - [NVD.DE](https://longbridge.com/en/quote/NVD.DE.md) ## Related News & Research - [Bitcoin Standard Treasury Company (BSTR) Terminates Business Combination, Team Continues Pursuing Active Bitcoin Treasury Management | CEPO Stock News](https://longbridge.com/en/news/296540800.md) - [Why is your gold waiting on a speech?](https://longbridge.com/en/news/296733808.md) - [Amboss Opens Affiliate Program: Earn Recurring Bitcoin Commissions by Growing Bitcoin Payments](https://longbridge.com/en/news/296124824.md) - [LQWD Technologies CEO to Speak at Bitcoin Asia 2026 in Hong Kong | LQWDF Stock News](https://longbridge.com/en/news/296496835.md) - [Hyperscale Data reports 278.03 BTC in treasury worth $21.6M](https://longbridge.com/en/news/296913023.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**