Quoth the Raven
· QTR’s Fringe Finance
· 02 сентября 2026, 11:09
· ⏱ 11 мин чтения
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Резюме
The Fed has quietly been expanding its balance sheet through Treasury-bill purchases, adding $344B in bills over the past year despite claiming tightening, while sticky inflation and rising long-term yields leave policymakers trapped: raising rates would increase government borrowing costs, so the only path is flat or lower rates. That tension is undermining bond-market confidence and foreign demand for Treasuries while supporting gold as an inflation hedge and policy-credibility trade.
•The Fed has increased its Treasury bill holdings by $344B over the last year, including $29B in August, even as the overall balance-sheet drop came from maturing MBS and 5-10 year notes.
•The Fed balance sheet has grown by $90B so far this year, after it took about four years to shrink the balance sheet by roughly $2.2T.
•Yields are breaking out of their post-2022 range: the 30-year broke decisively above 5% and the 10-year above 4.5% in June, after yields mostly ranged from 3.25%-4.75% since September 2022.
•Foreign holdings of US debt have fallen from the $9.4T peak seen in Q1; China's holdings dropped $100B over the year to $630B, the UK now holds more than China, and Japan has been roughly flat between $1T and $1.25T for a decade.
•PCE inflation is running at 3.7% year-over-year with a six-month pace above 4%, and 54% of the PCE basket has risen more than 3% in the past year versus a pre-COVID norm of 32%.
•Emergency Fed loan and repo programs created after the SVB collapse have all fallen to zero, while the Fed wants more usage of the Standard Repo Facility.
The article notes gold touched an intraday high near $4,612 and that investors are hedging sticky inflation and Fed uncertainty by continuing to hold and buy gold, an asset that has weathered inflatio
The article notes gold touched an intraday high near $4,612 and that investors are hedging sticky inflation and Fed uncertainty by continuing to hold and buy gold, an asset that has weathered inflation for decades.
Risk: Gold could correct sharply if Warsh's 2% inflation commitment is backed by credible tightening or if real yields rise aggressively.
The article reports long-end yields broke decisively higher, foreign appetite for US debt is falling, and yield-curve steepening makes Treasury issuance harder — all pressure on longer-duration Treasu
The article reports long-end yields broke decisively higher, foreign appetite for US debt is falling, and yield-curve steepening makes Treasury issuance harder — all pressure on longer-duration Treasuries.
Risk: The article also argues the Fed cannot raise rates and will likely need to cut, which could ultimately support duration if the Fed pivots to easing.
This newsletter, published September 02, 2026,
features Quoth the Raven
discussing GLD, TLT.
2 trade ideas extracted by AI with direction and confidence scoring.