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Gold, stocks, and UST surged on Trump’s back-door YCC plan; USD slumped. Will it work?

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Trump & Co. can’t resolve structural issues with cyclical fixes. Trump has to exit from his Iran war mess gracefully rather than stage an imaginary takeover of the SOH to bring oil, inflation expectations, and bond yields down. The Trump administration has to roll over ~$10T in debt at lower borrowing costs (coupon rate) in the coming months desperately. On Wednesday, gold and USTs surged, while US bond yields and the USD slumped as the US Treasury (TSY) Secretary Besant officially announced the intention of the US TSY to double the buyback of longer-term (10-30Y) USTs from the present $2B/operation to at least $4B/month per operation for Sep-Nov '26 (refunding QTR). The US TSY may also indicate the size of the next tranche of bond buying for the next fiscal refunding quarter on November 4, 2026. Overall, the program is officially the TSY Liquidity Adjustment Facility (TLAF), but the real purpose is to manage longer-term bond yields (10-30Y); i.e., it’s a form of back-door YCC....
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Will the Fed really hike by Dec? Let’s explore the fine print of Warsh’ comments

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Although there is policy space for a 25 bps rate hike—considering transitory hotter inflation and a fragile-stable, but not solid, labor market and Trump’s pressure—the Fed may be on a hawkish hold. Looking ahead, FOMC participants may continue hawkish jawboning without any rate action, as bond yields have already increased by ~50 bps since mid-May, when Warsh took over as Fed Chair. Warsh may include the trimmed mean inflation measure by regional Feds besides existing core PCE and CPI while proposing 4-6 FOMC meetings from 2027 instead of 8 in a calendar year. On Wednesday, July 29, 2026, apart from the daily dose of Trump’s monotonous reality show on his Iran war 'fun,' the focus of the market was on the 2 nd FOMC meeting under new Fed Chair Warsh, a known inflation hawk. Although the market was largely expecting a hawkish hold (including the FFR probability), there was some last-minute chatter, primarily floated by hedge fund Citadel Securities, about a potential Fed rate h...
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