u/rugger403 ·
Reddit — r/wallstreetbets
· August 08, 2026 at 22:00
· ⬆ 103 pts
· 💬 56 comments
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AI Summary
Summary
Author argues the Treasury will increasingly fund the $1.45T deficit with short-term T-bills while the Fed under Warsh shrinks its balance sheet, creating oversupply in longer-dated Treasuries and risking yield curve distortions.
He highlights that major U.S. Treasury holders like Japan and China are shifting toward gold as the deficit balloons, implying eroding confidence in U.S. debt.
Quality assessment: speculative macro analysis rather than rigorous DD — no concrete positions or price targets, but it identifies a clear gold-favorable, long-bond-unfavorable narrative.
Score103
Comments56
Upvote %89%
▶ Full Post Text
TLDR: We will use t-bills to fund the governments $1.45 Trillion deficit next year since it's cheaper and we will enter an election super cycle. At the same time, Warsh is looking to shrink the Feds balance sheet which will over supply longer dated treasuries; thereby potentially inverting the yield curve. While the US and Japan banded together to bail out the Yen, Japan/China (US' largest holder of treasuries) is starting to buy gold as the deficit grows.
[Fortune Article ](https://fortune.com/2026/08/08/treasury-borrowing-tbac-145-trillion-shortfall-bessent-debt/)
The author points out Japan and China, the largest foreign holders of U.S. Treasuries, are starting to buy gold as the U.S. deficit grows. Central bank gold demand is a structural tailwind; continued U.S. fiscal deterioration could accelerate the shift away from Treasuries into hard assets. Long GLD as a hedge against U.S. debt-confidence erosion and central bank diversification into gold. Deficit fears fade, real yields stay high, the dollar strengthens, or central bank buying pauses — any of these could pressure gold.
The Treasury plans to fund the deficit with T-bills while Warsh shrinks the Fed’s balance sheet, adding more longer-dated Treasury supply to the market. More long-end supply combined with reduced Fed demand should pressure long-dated Treasury prices, pushing yields higher. Short TLT as a tactical duration bet against longer-dated Treasury oversupply and Fed balance-sheet reduction. A flight-to-safety bid from equity or credit stress could force Treasury yields lower; yield curve positioning could also get messy.
This Reddit post, published August 08, 2026,
features u/rugger403
discussing GLD, TLT.
2 trade ideas extracted by AI with direction and confidence scoring.