Momir of IOSG argues that the most important macro price in the US is no longer the federal funds rate. It is the yield investors require to own long-dated US Treasuries.
His core view is that Washington is likely to protect Treasury market stability and the AI investment cycle, even if that means keeping inflation elevated for longer. In that framework, gold and Bitcoin both face a lasting tailwind because liquidity is being supplied while duration risk is being moved off private-sector balance sheets.
Why long-end Treasury yields matter
As of Aug. 24, the 10-year US Treasury yield was about 4.70%, while the 30-year had recently touched roughly 5.23%, near a 20-year high. Momir writes that the move higher cannot be pinned on a single factor.
He describes it as the result of several pressures arriving at once: inflation risk that has not gone away, continued heavy fiscal supply, thinner marginal demand for long-duration exposure, and a new rival for capital in AI infrastructure. The result is straightforward. Investors now want more compensation to hold long-dated government debt.
To contain pressure at the long end, the US Treasury said it would at least double the cap on liquidity-support buyback operations. Yields dipped briefly after the announcement, but the move did not hold. In Momir’s reading, the underlying supply and inflation problem is not something a few tens of billions of dollars in buybacks can solve.
Iran war and AI act as different catalysts
He says the Iran war has become a catalyst on several fronts. It pushes up oil prices, adds to cost pressure, and may weigh on real growth and tax receipts. It also raises expectations for spending, since gaps in munitions supply have been exposed and adapting to new forms of warfare requires money.
AI is a different kind of catalyst. Large-scale investment supports growth and lifts short-term inflation. On one side, that improves the odds that the debt burden can be diluted through stronger growth. On the other, those projects have an enormous appetite for capital, and that demand is now spilling into the bond market.
Momir writes that hyperscale cloud companies with strong balance sheets are now competing with the Treasury for funding in maturity buckets that had previously been dominated by the government.
How large AI bond issuance could affect duration supply
The Bank for International Settlements estimates that hyperscalers issued more than $100 billion in bonds in 2025, mostly at longer maturities. A Dallas Fed analysis used roughly $300 billion as a proxy for AI-related investment-grade issuance.
After adjusting for duration, Momir says that could amount to as much as $360 billion of 10-year equivalent duration. His conclusion is that the US is facing a difficult trilemma, and that strict inflation control is increasingly the politically easiest corner to sacrifice.
Bessent’s response: defend the Treasury market first
The article says recent moves by US Treasury Secretary Bessent show how closely he is watching the bond market.
The first step is supporting the yen to reduce the risk that Japan is forced to sell US Treasuries. Japan is the largest foreign holder of Treasuries. If Tokyo needs dollars to defend the yen, selling Treasuries is one way to get them, but that would intensify pressure on the market. In that sense, supporting the yen also lowers the odds of Treasury sales tied to intervention.
The second step is buying back less liquid long-dated bonds. Momir stresses that buybacks are not debt cancellation. If they are financed with newly issued Treasury bills, what changes is the maturity structure of government liabilities: less duration on one side, more short-dated paper on the other.
The next move may be to shift issuance further toward the front end. During 2023 and 2024, under Janet Yellen, the Treasury relied heavily on short-term bills when funding needs surged.
In a 2024 paper, Stephen Miran and Nouriel Roubini called that approach "activist Treasury issuance." Their argument was that roughly $800 billion of bill issuance above the normal path removed duration from the market and acted like "stealth QE," easing financial conditions by about as much as a 1 percentage point rate cut. They also accused the Treasury of using that approach to help President Biden’s 2024 election prospects. Momir says the odds are rising that a Trump Treasury could use similar tactics.
If these operations move ahead as expected, he believes they could inject a meaningful amount of liquidity and revive the debasement trade.
Gold has already secured its place
Momir says gold’s rally is not just a simple inflation trade.
From Aug. 1, 2024 to Aug. 24, 2026, gold rose from $2,455 an ounce to $4,664, a gain of about 90%. He points to several drivers: reduced trust in the dollar after it was used as a policy weapon, persistent inflation concerns, and what he sees as the most important force of all, the debasement logic. In his framing, expanding the money supply may be the only politically workable way out of the current debt cycle.
Can Bitcoin qualify as a debasement hedge?
His answer is not yet, though recent price action has made the question harder to dismiss.
In the previous leg led by gold, from Oct. 1, 2025 to gold’s peak on Jan. 29, 2026, gold gained 39.6% while Bitcoin fell 30.4%. For an asset marketed as digital gold, he says, that was a weak showing.
Recent trading has looked different. From Aug. 18 to Aug. 24, Bitcoin rose 22.2% while gold gained 5.9%. Momir says the move accelerated after the Treasury stepped up long-end buybacks. At the same time, Washington was also advancing crypto legislation that week, which makes the attribution less clean.
Still, if the market starts treating the move as a stealth-QE trade rather than a pure debasement trade, Bitcoin outperforming gold becomes easier to explain and may have more room to continue. He argues that crypto assets often react strongly when global liquidity broadens.
What could weaken the thesis
Momir closes by saying the trilemma does not mean inflation must spiral out of control, nor that formal yield curve control is about to arrive. It is a framework for understanding where the real constraints sit.
If inflation stays above target, deficits remain near 6% of GDP, and AI-linked borrowers keep adding long-duration supply, then preserving both Treasury market stability and the growth cycle will increasingly show up as shorter debt maturity, more routine liquidity backstops, and greater tolerance for inflation risk. In that scenario, he sees a constructive backdrop for both gold and Bitcoin.
The view would weaken if inflation drops back toward 2%, Congress produces a credible fiscal path, AI infrastructure becomes self-financing, or private demand absorbs interest-bearing issuance without asking for a higher term premium.
In his final line, Momir says the market’s next question should not be when the Federal Reserve will cut rates. It should be which corner of the triangle Washington is willing to break first. If the Treasury accelerates this transfer of duration, Bitcoin could face a more durable tailwind.