Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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It has been an interesting couple of days for the US dollar. On Wednesday, Treasury Secretary Scott Bessent surprised everyone by revealing that his department would double the size of its bond buyback programme, from $2 billion per operation currently to $4 billion in September. The move is designed to clear out some of the deadweight bonds that no one is interested in buying, providing more buoyancy to longer-dated treasuries in a bid to reduce yields on 10 and 30-year debt instruments. The strategy worked well initially, with yields rapidly falling from record highs and markets welcoming the injection of cash with open arms. The perceived additional liquidity translated to a swift weakening of the dollar on Wednesday, which dragged the DXY down 0.9% to 98.8 points.
Unfortunately for Bessent, markets were not impressed with the rather blunt mechanism and bond yields shot straight back up the following day, despite the Treasury Secretary hinting at the possibility of even larger operations in the future during an interview on Thursday morning. Treasury yields are right back where they started before the announcement and markets are demanding a more comprehensive plan to handle the United States’ debt, which as of today stands at $40 trillion.
US stock markets were equally unimpressed on Thursday, as the Dow Jones shed 700 points for a 1.3% daily loss, while the S&P 500 and Nasdaq 100 fell 0.9% and 0.7% respectively. Bond market shenanigans helped push precious metals higher, with gold closing back above $4,500 per ounce for the first time since May, while silver managed to climb to $68. Comments from the US President did nothing to reassure markets yesterday, after Donald Trump threatened Iran with “economic warfare and isolation on an unprecedented scale”. Crude oil prices predictably surged following the remarks, pushing the Brent Crude index up to $94 per barrel.
For all the drama pervading traditional financial markets, the big winner this week continues to be Bitcoin, which melted upwards earlier today to reach highs of $74,000. The crypto sphere has had more than enough meat to chew on over the last few days, what with the SEC’s new proposed ruleset for cryptocurrencies revealed on Tuesday, followed by a high-profile meeting at the White House on Wednesday, which brought together major industry figureheads, financial regulation officials, as well as the US President himself. If that were not enough, yesterday the CFTC organised an event of its own, during which Chairman Selig vowed that the commission would “move swiftly” on crypto rules if the US Congress fails to do so. The lack of progress on the legislative front has forced US regulators to take the helm. Public and private interests alike have clearly had enough of the gridlock that has immobilised the US Senate for much of the year and have decided to take matters into their own hands. Cryptocurrencies have suffered nothing but pain since last October; the sudden change in fortune is both surprising and refreshing.
About the Author
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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