Momir of IOSG argues that Washington is likely to choose Treasury market stability and the AI investment cycle over forcing inflation down quickly. In his view, the cost would be inflation staying higher for longer. He says that mix would be a sustained tailwind for both gold and BTC because it releases liquidity while taking duration risk off private-sector balance sheets.
He frames the key macro price this way: it is no longer the federal funds rate, but the yield investors demand to hold long-dated US Treasuries.
Why long-end Treasury yields are under pressure
As of Aug. 24, the 10-year Treasury yield was about 4.70%, while the 30-year had recently touched around 5.23%, near a 20-year high. The article says that move cannot be explained by a single factor. It reflects several forces at once: inflation risk that has not gone away, continued heavy fiscal supply, thinner marginal demand for long duration, and a new rival for capital in AI infrastructure. The result is straightforward: investors want more compensation before they will hold long bonds.
To push down the long end, the US Treasury said it would at least double the cap on liquidity-support buyback operations. Yields briefly fell after the news, but the move did not hold. In Momir’s reading, the underlying supply and inflation problem is not something tens of billions of dollars in buybacks can solve.
Iran war and AI spending as separate catalysts
The piece describes the Iran war as a catalyst on several fronts. It raises oil prices and cost pressure, while also potentially weighing on real growth and tax revenue. It also lifts spending expectations because gaps in military supply have been exposed, and adapting to a new form of warfare requires money.
AI is a catalyst too, but in a very different way. Momir writes that large-scale AI investment can lift growth and short-term inflation. On balance, that is positive because it improves the odds of growing out of the debt burden. But there is another side to it: those investments have a huge appetite for capital, and that demand is already spilling into the bond market. Mega-cap cloud companies with strong balance sheets are now competing with the Treasury for money in parts of the curve that used to be more government-dominated.
Citing estimates from the Bank for International Settlements, the article says total bond issuance by hyperscalers in 2025 exceeded $100 billion, with long duration making up the bulk. A Dallas Fed analysis used roughly $300 billion as a measure of AI-related investment-grade issuance. After adjusting for duration, that is equal to as much as $360 billion in 10-year equivalent duration.
From there, Momir argues that the US faces a difficult trilemma. He says it is becoming more obvious that strict inflation control is the corner most likely to be sacrificed politically.
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.
One 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. When it buys yen to defend the currency, it needs dollars, and selling Treasuries is one way to get them. That, in turn, would add pressure to the Treasury market. In that sense, supporting the yen also lowers the odds of Treasury sales tied to intervention.
Another step is buying back less-liquid long-dated bonds. The piece stresses that buybacks are not debt cancellation. If they are financed with newly issued short-term Treasury bills, what changes is the maturity profile of government liabilities: less duration at one end, more short-term paper at the other.
Momir says the next move is likely to be pushing issuance further toward the short end. In 2023 and 2024, under Janet Yellen, the Treasury relied heavily on bills when financing 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 a conventional path removed duration from the market, creating an effect similar to “stealth QE” and easing financial conditions by about the same amount as a 1 percentage point rate cut. They also accused the Treasury of using the strategy to help Joe Biden’s 2024 election prospects. The article says the odds are rising that Trump’s Treasury will use a similar playbook.
If those steps unfold as expected, Momir says they could bring a meaningful wave of liquidity and reignite debasement trades.
Gold already has a place in the trade
Gold’s rally is not presented here as 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%. The article points to several drivers: reduced trust in the US dollar after it was used as a policy weapon, inflation fears that have not disappeared, and what may be the most important factor of all — the debasement logic that expanding money supply could be the only politically workable way out of the current debt cycle.
Has Bitcoin earned a place as a debasement hedge?
Momir’s answer is not yet, but he says the latest move makes the question worth asking seriously.
He looks back at the previous stretch led by gold. From Oct. 1, 2025 to gold’s Jan. 29, 2026 peak, gold rose 39.6% while Bitcoin fell 30.4%. For an asset marketed as “digital gold,” that was a poor showing.
Recent price action looks different. From Aug. 18 to Aug. 24, Bitcoin gained 22.2%, while gold rose 5.9%. Momir says the move accelerated after the Treasury increased long-end buybacks. At the same time, Washington was also pushing crypto legislation that week, so he does not treat the move as cleanly attributable to one factor. If the market is trading it as a stealth-QE setup rather than a pure debasement trade, then Bitcoin outperforming gold makes more sense and may have more room to run, because crypto assets often react strongly when global liquidity expands.
What could weaken the thesis
The article closes by saying the trilemma does not mean inflation must spiral out of control, nor does it mean formal yield curve control is about to arrive. It is a framework for identifying where the constraints really sit.
If inflation stays above target, deficits remain around 6% of GDP, and AI-related borrowers keep adding long-duration supply, then the cost of preserving both Treasury market stability and the growth cycle will increasingly show up in shorter debt duration, a more routine liquidity backstop and greater tolerance for higher inflation risk. In that setup, the piece says gold and BTC both benefit.
The thesis would weaken if inflation falls back toward 2%, Congress produces a credible fiscal path, AI infrastructure becomes self-funding, or private demand absorbs interest-bearing debt issuance without demanding a higher term premium.
Momir leaves readers with a different question from the usual rate-cut debate: not when the Federal Reserve will cut, but which corner of Washington’s triangle breaks first. If the Treasury accelerates this duration transfer, Bitcoin could face a more durable tailwind.