US Treasury doubles long-end bond buybacks to $4 billion

The Donald Trump administration’s aggressive expansion of a Treasury bond buyback program has effectively neutralized the Federal Reserve’s ability to combat inflation, leaving Chair Kevin Warsh sidelined while inflation-sensitive assets surge.

A 24-Hour Drama in the Bond Market Economist Peter Schiff is sounding the alarm following the Treasury Department’s abrupt announcement on Wednesday.

The administration decided to double its liquidity-support buybacks for long-dated bonds, escalating from $2 billion to $4 billion per operation.

While the move initially sent the 30-year yield down to 5.19%, it quickly reversed course, climbing as high as 5.27% by Thursday.

Schiff took to social media platform X to express his stark outlook on the situation. "Inflation-sensitive markets are ripping because the Trump Administration pulled the rug out from under Warsh," he declared.

According to Schiff, the intervention undermined any anti-inflationary posturing from the Federal Reserve.

He noted that regardless of what Warsh “says about fighting inflation,” market participants now understand that the Fed will not counteract the Treasury’s fiscal actions.

Inflation-sensitive markets are ripping because the Trump Administration pulled the rug out from under Warsh.

No matter what he says about fighting inflation, investors now realize the Fed won't undermine Treasury by actually doing anything about it.

Commodities now, CPI later. — Peter Schiff (@PeterSchiff) August 21, 2026 Read Also: Trump Boosted INTC and DELL: Now He Says ‘Do Magnets’—Are MP and USAR Stocks Next? ‘Commodities Now, CPI Later’ The economist warned of severe downstream effects for the American consumer.

In his post on X, he summarized his prediction with a stark timeline: " Commodities now, CPI later." Furthermore, Schiff argued that the very act of announcing the bailout signaled inherent instability.

He stated that if Treasury Secretary Scott Bessent already thought there was a bond market problem, “sounding the alarm made the problem much worse.” ‘The Bessent Put’ and Broader Ramifications Schiff is not the only voice reacting to the intervention.

Macro investor Raoul Pal labeled the Treasury’s move “The Bessent Put.” Pal pointed out that while the extra dollars are relatively small, “the signal is enormous” because the fiscal authority—not the Fed—stepped in to defend the long end of the market.

Pal suggested this forces Warsh to deliver his part of a “grand bargain” between the two institutions.

The Bessent Put Today the US Treasury doubled the size of its long-end bond buybacks, the day after the 30-year yield hit a 19-year high at 5.33%.

The extra dollars are small.

The signal is enormous.

For the first time, the fiscal authority, not the Fed, stepped in to defend… — Raoul Pal (@RaoulGMI) August 20, 2026 Meanwhile, economist Justin Wolfers described the incident, in his blog, as “24 hours of drama” where yields ended up basically unchanged.

However, Wolfers emphasized that the true underlying narrative remains the longer-term climb in borrowing costs driven by AI-related borrowing and record government deficits.

For Schiff, the takeaway remains clear: the administration’s actions are actively feeding the inflation fire rather than extinguishing it.

How Have Stocks and Bonds Performed? At the last check, the 30-year Treasury bond yielded 5.25%, the 10-year Treasury bond was at 4.79%, and the two-year bond was at 4.20%.

The primary ETF specifically tracking the long end of the U.S.

Treasury yield curve—including the 30-year benchmark bond—is the iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT ), which closed 0.92% lower at $82.34 on Thursday.

It was lower by 6.28% year-to-date, down 1.85% over the last month and 5.18% over the last year.

The S&P 500 index has advanced 11.41% year-to-date.

Similarly, the Nasdaq Composite index was up 12.19%, and the Dow Jones gained 9.05% YTD.

On Thursday, the SPDR S&P 500 ETF Trust (NYSE: SPY ) and Invesco QQQ Trust ETF (NASDAQ: QQQ ), which track the S&P 500 and Nasdaq-100, respectively, closed lower.

The SPY was down 0.84% to $762.60, while the QQQ declined by 0.72% to $710.93.

Meanwhile, the Dow tracker, State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE: DIA ), also ended 1.27% lower at $527.51.

In premarket on Friday, SPY was up 0.35%, QQQ gained 0.59%, and DIA advanced by 0.40%.

Read Also: Trump Administration 'Panicked' by Announcing Treasury Bailout, Says Peter Schiff: 'Sounding' the Alarm Made the Problem Worse Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published editors.

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