Fejau on the Treasury Quietly Running Yield Curve Control

Summary

Felix breaks down the Treasury's QE-like long-end buybacks, the change in refunding guidance, and why Bessent's escalation amounts to yield-curve control. He argues the main implication is dollar debasement and sees gold and Bitcoin as the cleanest ways to ride it, while US equities face a currency-hedged foreign demand drag. He expects intervention to escalate into the midterms and warns against fighting the Treasury.

• Treasury shifted post-2022 funding toward T-bills, starving long-end duration.
• Quarterly refunding guidance changed from 'increase' to 'change,' signaling possible cuts to long-end coupon issuance.
• Treasury doubled long-end buybacks to about $4 billion, and Bessent indicated they could go further.
• Felix sees this as an implicit yield-curve-control / QE-like regime.
• Dollar weakness is the exhaust valve; foreign buyers face currency losses on US assets.
• Gold and Bitcoin are the preferred debasement assets; Felix has been buying with a six-month horizon.
• Key charts include long-end yields, 2s10s curve, MOVE index, rate expectations, and the dollar.
• A 10-year yield above 5% is flagged as a threshold where the equity correlation could flip negative.