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US Treasury Keeps Auction Sizes Unchanged. How will it Affect Bitcoin?
The US Treasury Department has confirmed that it will maintain the auction sizes steady for US notes and bonds over the next few quarters. The total refund of $125 billion for the May to July quarter is aligned with expectations, and the quarterly refunding aims to raise $17.2 billion from private investors.
The Treasury has also announced the launch of its buyback program, with the first scheduled on May 29. The Treasury’s decision to maintain the auction sizes without any changes is based on current projected borrowing needs.
The Treasury has noted that it has significantly raised issuance sizes for nominal coupon and floating rate note securities since August. However, the Treasury has announced that it doesn’t anticipate increasing auction sizes for at least the next several quarters.
US Treasury BuyBack Market Support
The US Treasury has also confirmed that it intends to maintain “incremental increases” to their auction sizes for Treasury Inflation-Protected Securities (TIPS) to maintain a stable share of TIPS as a percentage of the total marketable debt outstanding.
Under the buyback program, the Treasury plans to hold weekly “liquidity support” buybacks of up to $2 billion per operation in nominal coupon securities, and up to $500 million per operation in TIPS.
These buybacks can help improve liquidity in the bond market by providing a regular opportunity for market participants to sell older and less liquid off-the-run securities across the yield curve back to the Treasury.
What it Means for Bitcoin
Many fault the Fed’s current intervention as a counterproductive move to reduce inflation. Some argue that the move is a bank bailout and will not positively impact the economy as it induces Q.E.
This means that inflation will continue to increase as the Feds raise interest rates to accommodate the growing QE in the market. In recent times, when a hike in interest happens, Bitcoin sees more funding as investors search for alternative assets to hedge inflation.
If the same plays out, the apex coin will see notable increases in value as the US government struggles to keep inflation in check.
