Warning: Interest Rates Not Done Surging; Treasury’s ‘Bazooka’ Coming | Peter Boockvar

**Peter Boockvar** (0:00)
He's picked a fight with the market and the long end. I think it goes higher. I'm not bullish the dollar, I've not been bullish the dollar. Ultimately, the Fed has to get involved here with some sort of QE or yield curve control. These are dangerous band-aids because at some point, they unwind.

**David Lin** (0:18)
Do you think he has enough firepower to ultimately change things?

**Peter Boockvar** (0:22)
I'm actually somewhat worried about.

**David Lin** (0:24)
Bond yields are snapping back today on August 20th, following the US Treasury's announcement yesterday on the 19th, that they would double their bond buyback program that had a huge impact on all markets.

**SPEAKER_3** (0:36)
So tell us through what you were trying to do here by announcing the increased size of the buybacks.

**Scott Bessent** (0:43)
We're trying to signal that we think that this is a thinly traded area of the market that we're in August, and there's been a lot of corporate issuance that's influenced the market. And we believe that there are many underlying factors in terms that the market is not looking at. And we are going to make a market in these. We routinely do buybacks, and we're going to increase the size of the buyback. And Sarah, I would note that it could be more than the $4 billion per issue.

**David Lin** (1:16)
With gold rallying 3%, Bitcoin rallying 5.5%, and the S&P and NASDAQ both are rallying. And that move, although nothing's been done yet, they announced that they would double their bond buybacks from $2 to $4 billion. But they haven't done that yet. Although they haven't done it yet, this announcement itself was enough to signal to markets that the Treasury is willing to do whatever it takes to cap the long end of the interest rate curve before what many economists would describe to be an economic catastrophe if yields go much higher.
Now, today, on Thursday, stocks are down. The NASDAQ is back down. It's down 1%.
Gold and Bitcoin are still up. They're maintaining their rally with gold up about 1%.
Bitcoin up another 6%, which we'll talk about today. And the Treasury yield is moving back up. So the 30-year is up 1%. Peter Boockvar, CIO at One Point BFG Wealth Partners, is here to give us his outlook on not just the bond market but the entire economy. What is the Fed going to do next in response? And what is the Treasury going to do next? What bazooka, so to speak, is Scott Besson likely going to fire next given that whatever announcement he made yesterday was not enough to keep the long end of the curve down. This video is brought to you by Kalshi. It's the largest prediction market in the United States. Unlike a sports book, you're trading peer to peer on real world events from economic data to political outcomes. The price moves based on public opinion, not a house. Go to the link in the description down below or scan the QR code here and use my code LinLin to get special promotion. New users can get $25 when they trade $25. Kalshi is CFTC approved and available in all 50 states, including California and Texas. And right now, there's a very important trade going on, which is how high the 10 year yield can get at the end of the year. Trade is replacing a 53% chance that it will go to 4.75 or above and only a 32% chance that it will go up above 5%. Peter is going to give us his outlook on whether 10 years headed, despite the treasury's recent interventions. And if you believe that it will go above 5%, and if you put, let's say, $50 down on that particular trade, your payoff could be $144 or more. So stay tuned for Peter's outlook and his answer to this question. Welcome back, Peter. Good to see you.

**Peter Boockvar** (3:36)
Thanks, David. Appreciate having me back.

**David Lin** (3:37)
A sharp move lower for yields yesterday and a sharper rebound in yields today. The 30 years up, 90 basis points. It was at one point earlier in the day up 1.1%.
Why the sudden reversal?

**Peter Boockvar** (3:52)
I think it's a couple of things. I think what Besson is trying to do is rather complicated in the sense of the potential ripple effects, that there's no free lunch here. First of all, we're talking about a very tiny size. Two billion dollar buyback going to four, that doesn't move the needle. Now, from a signaling standpoint, it obviously reflects his disappointment with where long rates have gone. And he was on CNBC talking about even enlarging that buyback. But this is not the Fed doing it where they could just print money. He needs to raise money in order to do this. And we assume he's gonna sell more T-bills in order to buy longer dated paper. Now, on one hand, a positive of buying longer dated paper is most likely he's buying bonds that were issued before 2022 and that are probably trading at 75 to even 50 cents on the dollar because of the sharp sell-off in those bonds since 2022 So on one hand, he's buying back at a discount these bonds, which instead of paying back $100, 100 cents on the dollar when they mature, he can pay you back at 50 cents on the dollar. On the flip side, though, is he's giving away by retiring low-cost debt for the US government and he's replacing it with T-bills that are going to cost him three and three quarters percent right now, you know, going out to about a year. And if he issued more to the two-year, it would be north of four percent.