Live Markets: Fears may be overdone but couch cushion coins won't fix bonds

Cheniere Energy

03/09/2026 18:42

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FEARS MAY BE OVERDONE BUT COUCH CUSHION COINS WON'T FIX BONDS
U.S. Treasury Secretary Scott Bessent announced in August that the Treasury Department will double buyback sizes for 10- to 30-year Treasury debt securities to at least $4 billion per operation with the buybacks effective from September 9 through November 4.
With the date fast approaching Brian Rehling, co-head of fixed income and digital asset strategy at Wells Fargo Investment Institute put the upcoming transactions into perspective. 
While the announcement prompted some investor fears that it could be a sign of dollar debasement or "runaway money printing," Rehling disagreed.  
"This is not the government firing up the printing press. It is closer to using cash already in a checking account to pay down a small piece of a credit card balance," he wrote. "Unusual? Yes. A currency crisis? No."
Specifically, Bessent has said that rather than issuing more short-term Treasury bills, the government may instead dip into the Treasury General Account, which is funded by taxes and bond sales. And Rehling notes that this account's balance has grown to nearly $950 billion from its more typical $550 billion to $650 billion level.
So, while the dollar debasement camp is worried that the buybacks look like a new money print by the Federal Reserve, Rehling argues that this is "not what is being discussed." 
      "No new money is created, and the move by itself does not increase the total amount of government debt," he said "It is more like pulling a few coins from under the couch cushions than installing a printer in the living room." 
However, the strategist noted that the move by Bessent & Co does not change the bigger problem — the country's structural deficit problem. 
"U.S. federal debt is now more than $40 trillion," he wrote, adding that "deficits are not showing clear signs of shrinking, and long-term interest rates remain sensitive to concerns about government borrowing." 
"It may help the Treasury manage near-term funding needs, but it does not change the larger bond-market math. Heavy government borrowing, large deficits, and still-elevated long-term rate risk remain meaningful headwinds for long term bonds," Rehling said.   
As a result, the strategist suggested that while investors should still hold some longer-term bonds for income and diversification, "exposure should be limited." 
(Sinéad Carew)
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