U.S. Three Major Stock Indices Closed Lower, Gold and Bitcoin Both Rose—Is Bessent's Market Rescue Failing?
- Core View: The U.S. Treasury Secretary twice expanded Treasury buyback operations to rescue the market, but failed to effectively push down long-end yields, reflecting weak market confidence; meanwhile, weak consumer data and concerns over a damaged dollar credit have driven gold and Bitcoin higher.
- Key Factors:
- Bessent expanded Treasury buybacks to $4 billion and hinted at further increases, but the 10-year yield still closed at 4.7% and the 30-year at 5.25%, suggesting the rescue effect fell short of expectations.
- U.S. stocks subsequently came under pressure, with the Dow falling 1.32%, the S&P 500 down 0.87%, and the Nasdaq down 1%.
- The buyback scale is too small and largely symbolic, with diminishing marginal effects; meanwhile, it fails to address structural pressures such as inflation expectations, fiscal deficits, and rising Treasury supply.
- Frequent intervention has instead heightened market anxiety, signaling official concerns over high deficits and heavy bond issuance, which undermines policy credibility.
- Walmart's earnings report showed U.S. same-store sales growth hitting a six-and-a-half-year low, with a weaker-than-expected Q3 profit outlook and shares falling over 9% intraday, revealing risks of slowing consumer spending.
- Treasuries and the dollar face a dilemma: suppressing long-end rates requires accommodative policy but damages dollar credit, while defending the dollar requires high rates that exacerbate Treasury selling.
- Over the past month, both gold and Bitcoin have risen more than 10%, reflecting declining confidence in the fiat currency system.
Over the past two days, faced with persistently high U.S. Treasury yields, Treasury Secretary Bessent stepped in twice to stabilize the market.
First, he announced an expansion of the Treasury buyback program to $4 billion, and the market gave some face. Second, he hinted that "the scale could be even larger," but the market completely stopped buying it.
The general consensus on the results of these two market rescue attempts is that they failed to achieve the desired effect.
1. A Rescue That Went Nowhere: Yields Did a Full Circle
The data shows just how awkward this is. Treasury yields briefly dipped following the announcement but quickly rebounded—the 10-year closed at 4.7%, and the 30-year at 5.25%, almost unchanged from before the intervention.
Last night's U.S. stock market also surrendered: the Dow fell 1.32%, the S&P 500 dropped 0.87%, and the Nasdaq declined 1%.
2. Why Can't It Be Saved? Three Reasons
First, there's the scale. A $4 billion buyback is a drop in the bucket for the entire Treasury market. The real value of such operations has never been the amount—it's the signal. The Treasury is telling the market: I don't want long-end yields rising this fast. The problem is, that signal only works once. The second time, when you hint "there's more where that came from," the marginal effect approaches zero.
Next, there's the tool itself. Buybacks address liquidity, but this round of rising yields is driven by far more than liquidity—inflation expectations, fiscal deficits, and surging Treasury supply are all pushing yields higher. Using a drain-cleaning tool to fix a load-bearing wall simply won't work.
Finally, there's confidence. A buyback is essentially a technical backstop measure; it can't address the root causes of high deficits and heavy issuance. What's worse, it can backfire: the more frequently the Treasury intervenes, the more the market reads anxiety behind it—if even the people managing the house are getting restless, how solid can the house really be?
3. The Thermometer for the U.S. Economy Is Hiding in Walmart's Earnings
In last night's trading, the Magnificent Seven tech stocks closed slightly lower, while memory chip and optical module stocks were mixed with limited moves—nothing particularly noteworthy. What's actually worth a closer look is a traditional company that's been pushed out of the spotlight by the AI rally: Walmart.
This latest earnings report looks good on the surface but feels cold underneath. Second-quarter revenue and adjusted earnings per share both beat Wall Street expectations, and the company raised its full-year guidance. But the market found cracks: U.S. same-store sales growth slowed to its lowest level in more than six years, and the third-quarter profit outlook came in below expectations. Concerns about a slowdown in U.S. consumer spending were instantly ignited, sending the stock down more than 9% intraday.
Walmart's earnings are a thermometer for ordinary American households. What they show is this: high credit card interest, mortgage pressure, and rising prices across the board—everyday people are struggling. And if U.S. consumption, the most heavyweight component of the global economy, starts to slide, that's hardly good news for the overall macro picture.
4. Save the Treasury or Save the Dollar?
Let's zoom back out to Treasuries. With long-dated bonds being continuously sold off, the Treasury and the Federal Reserve are being cornered into an impossible dilemma: save the Treasury or save the dollar?
To push long-end yields down, you need easing, which damages dollar credibility. To defend the dollar, you have to tolerate high rates, and Treasuries keep getting sold. Either way, you're admitting to the market—neither one is in good shape.
And once the narrative of "a weak Treasury and a sliding dollar" takes hold, capital's instinct is to seek alternatives. That's exactly why gold and "digital gold" Bitcoin have both been surging recently: over the past month, both have gained more than 10%.
5. Final Thoughts
The Treasury's two rescue attempts lost to market confidence—investors may have already figured it out: technical buybacks can't fill structural holes.
Going forward, the real thing to watch is whether the macro side will take further, larger-scale action on the Treasury and dollar narrative.
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