The Treasury doubles buybacks of government bonds to stabilize the market, but US stocks only register slight gains—does the real signal lie in bitcoin?

Previously, US Treasury yields remained high, with the 30-year Treasury yield once reaching its highest level since 2007. This unfavorable macro environment made US stocks struggle more and more, especially chip stocks, which had previously soared but now saw a significant pullback.

But yesterday, the US Treasury finally took action.

1. Treasury Steps In: Buyback Limit Doubled

The US Treasury announced that from September 9 to November 4, it will at least double the single-transaction cap on repurchases of 10-year to 30-year US Treasuries—from $2 billion to $4 billion.

This move essentially means: the Treasury is going to spend more money to buy back the long-term bonds it previously issued that are nearing maturity. The buyback is focused on two ultra-long maturities: the 10 to 20-year and 20 to 30-year bonds.

The market reaction was immediate: long-term Treasury yields fell rapidly, with the 30-year yield dropping nearly 10 basis points at one point, US stocks rose slightly, and the entire cryptocurrency market saw a long-awaited surge.

2. Why the Market Buys In: The Treasury Is Doing the Fed's Job

The significance of this buyback is not just in the amount, but in the actor.

The market generally interprets this move as "the Treasury doing the Fed’s job." The logic is this: the Fed rarely directly prints money to buy bonds, but long-term rates do need to be pressured lower, so the Treasury steps in, using buybacks to inject funds directly into the market and push down long-term rates.

In terms of scale, the Treasury's buybacks can’t compare to the Fed’s quantitative easing. But the signal it sends is strong enough—the government is personally stepping in to support the market. Sometimes, stabilizing confidence is worth more than the money itself.

3. Something Unusual: Stock Gains Lack Conviction Despite Good News

However, a rather rare phenomenon occurred in last night's session.

Logically, with such significant positive news, US stocks should have soared. But the actual performance was mediocre: the three main indexes only closed slightly higher, and there was stark divergence among sectors. Previously hot sectors like storage and optical modules continued to pull back, showing no reaction to the good news, as if they never got the memo.

On the contrary, a long-forgotten player suddenly stole the spotlight—Bitcoin unexpectedly surged, jumping from around $64,000 up to the $70,000 mark.

4. Bitcoin’s Unusual Move Was the Most Telling Signal Last Night

Why did the Treasury’s intervention fail to excite stocks, but Bitcoin took off?

The answer lies in Bitcoin’s long-standing role: it's a barometer of US dollar liquidity. Stock prices depend on earnings and narrative, but Bitcoin is highly sensitive to "how loose or tight the money is" in the market. The Treasury's bond buybacks are essentially a liquidity injection into the system—while stocks are still digesting their own negatives, Bitcoin had already responded to the warming liquidity.

This also explains the previous market structure. In the past year, US dollar liquidity has been tight, with most available funds drained by the AI narrative, creating a situation where "only AI rises while everything else stalls." Now the story has reversed: AI-related sectors are pulling back, but Bitcoin has suddenly surged thanks to positive liquidity conditions.

For the entire market, this is actually a good thing. The return of liquidity won’t always stay in just one asset—when the water level rises, it's the entire US stock market that ultimately benefits.

5. In Conclusion

The Treasury's buyback operation suppresses rates and stabilizes confidence; but the real signal of a shift in liquidity came from that unexpected big green candle in Bitcoin.

The correction in the AI sector may not be over, but the market’s underlying logic is shifting from "fighting for existing funds" back to "waiting for fresh inflows." Now that the liquidity tap has been turned back on, the trading landscape could be much broader than it was over the past month.