Bessent says we can grow our way out of $40 trillion and gold just laughed so hard it hit $4,700 · Daily Briefing

In 30 seconds: Treasury Secretary Bessent's bond buyback program using the Treasury General Account has sparked intense debate about fiscal sustainability, rate suppression, and whether raiding the TGA to suppress long-term yields is a legitimate policy tool or a cover for runaway deficit spending. Gold hit multi-month highs above $4,700 and Bitcoin surged past $78,000 in a sustained rally driven by debasement fears, dollar credibility concerns, and record call volume on Bitcoin ETFs, even as tech/Nasdaq stocks sold off. Oil continues to flow through the Strait of Hormuz at elevated cost—roughly $20 million per VLCC passage—while TotalEnergies' CEO warns that repeated LNG price shocks are eroding emerging-market trust and driving a return to coal. The US imposed 50% tariffs on a wide range of Canadian imports, threatening to devastate the deeply integrated North American auto industry, prompting expected Canadian retaliation and raising questions about the viability of the trade relationship.

President Trump and I are laser focused on paying down the debt. That is what the US Treasury Secretary said on August 19, 2025. The national debt, meanwhile, is set to increase by $2.8 trillion over the next year. The Treasury Secretary waved off the milestone: "There's nothing magic about the $40 trillion number." And we can grow our way out of that. Gold hit a three-month high. The buyback program would reduce net supply of long bonds by 16%, up from 8% previously. Net UST issuance by Bessent: $1.4 trillion. The US Treasury Secretary insists the government hasn't bought a single extra bond yet, and did not offer additional information on government bond market intervention, including on the TGA when pressed on CNBC. Its level has been set by a highly predictable formulaic policy in place since soon after 9/11/2001, drawn down only during crises or debt ceiling standoffs. Spending it down to suppress long rates is a different proposition entirely. And long rates need suppressing. The 30-year nominal yield is up 55 basis points over the last six months, with term premium contributing 32 basis points of that move. Rates have been too low relative to conditions by at least 50 basis points over the past 10 years. The gold market has noticed. Gold hit a three-month high as the debasement trade returned alongside the Treasury's announced ramp-up in buybacks of long-dated government debt.

The same debasement concerns driving the Treasury bond buyback debate are also a factor in the gold and Bitcoin surge.

Gold closed at $4,710.70, up 1.87% on the day from $4,624.10, extending a rally that has the metal comfortably above $4,700. The move is not subtle. The thesis: sanctions on China are calling into question USD reserve status, and hard assets are repricing accordingly. Bitcoin, for its part, does not seem to have missed that memo. It pushed above $78,000, capping a 10-day rally of 25%+, the strongest such stretch since Election Day 2024. The options market is leaning in hard. The $IBIT Bitcoin ETF set record call volume on Wed, with heavy activity continuing into the rest of the week. Call skew sits at 98/100 — extreme by any measure. People are not hedging downside here; they are chasing upside with leverage. Last week's asset class scoreboard tells the divergence story cleanly. Bitcoin ETF $IBIT topped weekly asset class performance leaderboard, gaining 22.6%, while Nasdaq 100 $QQQ fell 2.4%. On the session, semis gained 3.7%, QQQs gained 1.5%, software gained 1%, and S&P 500 Equal Weight gained 0.2%. So the trade is: sell the things that need a functioning global order, buy the things that benefit from its absence. The market, today, is taking it very seriously.

Oil is still moving through the Strait of Hormuz. The passage is not free, though. Tracking the actual flow is trickier than it sounds. Confirmed transits on a seven-day average sit at roughly 4 million barrels a day, though that figure is expected to be revised upward to around 5 million as lagging vessel data fills in. VLCC Strait of Hormuz passage cost (freight and insurance): $20 million. SPX 0DTE movement (implied): 33bps. Markets are pricing drama; tankers are pricing insurance. The longer-term damage may be in gas, not oil. Two back-to-back price shocks — in 2022 and again more recently — are teaching developing economies a lesson, and the lesson they are drawing is: coal does not surprise you. This is the case even as the front-month natural gas contract settled at $2.82 on August 24, up 1.55% on the day.

The US imposed 50% tariffs on a wide range of Canadian imports on Saturday, escalating America's trade war with Canada. At 50%, the tariffs should be prohibitive enough that trade falls to zero. But the auto sector is not a clean bilateral story. Canadian cars and trucks have a lot of US content, which means the tariff carries a direct cost to the US economy. The picture that emerges is layered: 50% tariffs on Canadian vehicles heading south, the possibility that Canadian-made parts heading to US auto factories face the same rate, and Canada's announced retaliation on US-made cars and trucks heading north. Forty-two percent of companies have moved or plan to move production south of the border. For China, the calculus is different. For China, the tariff gap with other countries matters as much or more than the absolute level of the tariff, and the economic impact depends on whether other Asian countries face similar top-up tariffs from the overcapacity 301s or not.