The three major U.S. stock indices closed lower, while gold and Bitcoin both rose. Is Besant's market rescue going to fail?

In the past two days, facing persistently high U.S. Treasury yields, U.S. Treasury Secretary Janet Yellen has stepped in twice to stabilize the market.

The first time, she announced an increase in the Treasury buyback scale to $4 billion, which the market somewhat acknowledged; the second time, she hinted that "the scale could be larger," but the market completely dismissed it.

The results of the two interventions have led the market to generally believe that they did not achieve the expected effect.

1. A Lonely Rescue: Yields Turned Around and Returned to the Starting Point

The data clearly shows how awkward the situation is. U.S. Treasury yields briefly dipped following the announcement but quickly rebounded—10-year yields closed at 4.7%, and 30-year yields at 5.25%, nearly unchanged from before the intervention.

Last night, the U.S. stock market also surrendered: the Dow Jones Industrial Average fell by 1.32%, the S&P 500 dropped by 0.87%, and the Nasdaq declined by 1%.

2. Why Can't It Be Saved? Three Layers of Reasons

First, let's talk about scale. A $4 billion buyback in the entire U.S. Treasury market barely makes a sound. The truly valuable part of such operations has never been the amount but the gesture— the Treasury is telling the market: I do not want long-term yields to rise so quickly. The problem is that a gesture can only be used once; hinting "it could be more" a second time leads to diminishing marginal effects.

Next, let's look at the tools. Buybacks ease liquidity, but the driving forces behind this round of rising yields are far more than just liquidity— inflation expectations, fiscal deficits, and increased Treasury supply are all pushing upwards. Using tools meant for clearing drains to repair load-bearing walls is naturally futile.

The final layer is confidence. Buybacks are essentially a technical stopgap measure that cannot address the root causes of high deficits and high debt issuance. Worse, it can produce counterproductive effects: the more frequently the Treasury intervenes, the easier it is for the market to read the underlying anxiety— if even the caretaker can't sit still, how sturdy can the house be?

3. The Thermometer of the U.S. Economy is Hidden in Walmart's Earnings Report

Last night, the seven tech giants in the U.S. stock market saw slight declines, with storage chips and optical modules experiencing mixed performance and limited fluctuations, which were not particularly noteworthy. What is truly worth a closer look, however, is a traditional company that is almost being overshadowed by the AI boom— Walmart.

This latest earnings report looks good on the surface but feels cold inside. Second-quarter revenue and adjusted earnings per share both exceeded Wall Street expectations, and the full-year financial guidance was also raised. However, the market discovered cracks: same-store sales growth in the U.S. dropped to its lowest level in over six years, and the profit outlook for the third quarter fell short of expectations. Concerns about a slowdown in U.S. consumer spending were instantly ignited, causing the stock price to plummet by over 9% during the day.

Walmart's earnings report serves as a thermometer for ordinary American households. It indicates that high credit card interest rates, burdensome mortgages, and rising prices are making life difficult for the average person. If the most significant consumer market in the global economy, the U.S., begins to decline, it is certainly not good news for the overall macroeconomic situation.

4. Save U.S. Treasuries or Save the Dollar?

Returning to U.S. Treasuries. As long-term bonds continue to be sold off, the Treasury and the Federal Reserve are caught in a dilemma: save U.S. Treasuries or save the dollar?

To suppress long-term rates requires easing, which damages dollar credit; to protect the dollar means tolerating high rates, leading to further selling of Treasuries. Whichever option is chosen, it amounts to an admission to the market— the situations for both are not optimistic.

When the narrative of "weak U.S. Treasuries and a declining dollar" begins to surface, the instinctive reaction of capital is to seek alternatives. This is precisely why both gold and "digital gold" Bitcoin have recently surged: both have risen over 10% in the past month.

5. In Conclusion

The Treasury's two interventions have lost to market confidence— investors may have already realized: technical buybacks cannot fill structural gaps.

What is truly worth watching next is whether there will be further large-scale actions from the macro perspective regarding the narratives surrounding U.S. Treasuries and the dollar.

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