The debasement trade is gaining traction on Wall Street as concerns mount over the size of the U.S. budget deficit. Treasury Secretary Scott Bessent announced a doubling of bond buybacks to at least $4 billion, while federal government debt topped $40 trillion and July’s monthly deficit reached a five-year high. Gold hit three-month highs, climbing more than 5% last week and on track for its biggest monthly rise since 1999. Bitcoin surged 22% last week, its biggest three-day rally since 2023, briefly touching $80,000. The U.S. dollar index hit three-month lows, with Fed funds futures now pricing in roughly a 56% chance of a rate hike at the October meeting.
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