What Do We Know About The Debasement Trade?
Last week, Treasury Secretary Scott Bessent announced he would double the Treasury’s buyback of long-dated bonds in a bid to curb rising yields. The move came after the 30-year Treasury yield rose to its highest level since 2007—amid concerns about the war in Iran and the U.S. national debt hitting $40 billion. The move prompted a fresh round of dollar selling, while boosting crypto and gold. In a blog post on Friday, hedge fund billionaire Ray Dalio warned of a looming debt crisis and said investors should be “underweighting debt assets like bonds, and overweighting gold and a bit of Bitcoin.”
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Key Background
Last week, President Donald Trump hosted several crypto executives at the White House, giving another boost to the crypto surge. At the event, Trump called on Congress to pass the long-stalled CLARITY Act, which is backed by the crypto industry and will establish legal guidelines on digital assets. The president said: “We need Congress to take the next step by passing the CLARITY Act, a fair version of the CLARITY Act…It’s a very, very powerful structured legislation which will keep us ahead of China, keep us ahead of everyone else.”
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