Last week, the US Treasury expanded its long-term Treasury bond repurchase program, causing long-term Treasury yields to surge and then fall, the dollar to weaken, and precious metals to surge. This, coupled with the hawkish tone of the Fed's July FOMC meeting minutes, led to volatile global stock markets. Middle East geopolitical tensions continued to support oil prices, while Asian stock markets showed significant divergence.

Recent actions by the US Treasury have been peculiar and contradictory. On the one hand, it spearheaded economic sanctions against Iran; on the other hand, it continued to intervene in long-term US Treasury yields, attempting to lower the government's debt issuance costs. Increased geopolitical tensions due to sanctions will push up oil prices, indirectly affecting the bond market. These two policy objectives thus conflict with each other, creating an inherent contradiction. If oil prices surge, it will be very detrimental to the Treasury's goal of controlling debt issuance costs; conversely, controlling oil prices and slowing sanctions will weaken the effectiveness of economic sanctions. Oil price risks are brewing, becoming a policy dilemma that the US cannot avoid.

US President Trump threatened last week with an "unprecedented economic war and isolation" against countries supporting Iran, warning of consequences for any country providing "lifelines of any kind" to Tehran. Treasury Secretary Bessenter's announcement of specific actions next Monday further exacerbated market concerns about supply disruptions in the Middle East.

In August 2026, the US federal debt officially surpassed $40 trillion, setting a landmark record in US fiscal history. New debt since 2019 has reached $17 trillion, a short-term increase roughly equivalent to the accumulated debt over the 225 years since the founding of the United States, showing a clear acceleration in debt expansion. Coupled with a high-interest-rate environment, interest payments on US Treasury bonds reached $963 billion in the first ten months of fiscal year 2026, surpassing defense spending and federal healthcare to become the second largest rigid expenditure, making interest payment pressure fully apparent.

Last Week's Market Performance Review:

US stocks rebounded on Friday (August 21), with the Dow Jones Industrial Average rising more than 500 points, and the S&P 500 and Nasdaq Composite also strengthening. However, US Treasury yields continued to climb, with the 10-year yield approaching 4.75% and the 30-year yield remaining around 5.27%, keeping market concerns about a deeper correction in the fall alive. At the close, the S&P 500 fell 1.4% this week to 7674.31 points; the Nasdaq fell 2% to 26180.45 points; both ending a three-week winning streak; the Dow Jones Industrial Average closed the week at 53277.01 points, marking its second consecutive week of decline. Selling pressure also spread to overseas markets, with the MSCI World Equity Index falling nearly 1% this week.

Last week, precious metal prices surged, driven by a weaker dollar, cooling market expectations for a September Fed rate hike, and rising concerns about the US fiscal outlook. Spot gold broke through $4,500/oz on Wednesday after the US Treasury announced its buyback program, and briefly reached $4,600/oz on Friday afternoon, rising $84.49 or 1.87% on the day and $227.50 or 5.20% for the week.

Silver is expected to continue fluctuating next week around inflation, economic growth, and expectations for Federal Reserve policy. US July personal consumption expenditure price data and the Fed Chairman's speech at the Jackson Hole symposium are likely to be key factors driving volatility in the precious metals market. Spot silver remained around $69/oz, having earlier broken through the $70/oz mark. Spot silver rose 6.62%.

The US dollar index is near a three-month low, currently trading around 98.80, continuing its decline from the previous trading day. Observing the current daily chart structure of the dollar index, the price is clearly trading below the Bollinger Band midline and continues to approach the lower band, while the midline itself is starting to slope downwards. After a rapid decline from above 101, the index did not immediately recover to its original consolidation range but instead consolidated in the lower range, indicating a downward shift in the short-term price center.

The euro is currently trading around 1.1680 against the dollar, having earlier failed to convincingly break through the 1.1700 level. This pullback stems from a marginal rebound in the dollar, with market participants continuing to assess recent US data and developments in the US bond market. The dollar/yen pair closed last week at the lower end of its 159.00 range, showing lackluster performance. In Japan, inflation accelerated in July, with overall consumer prices rising 1.9% year-on-year, and core indicators also strengthening, while August business surveys were stronger than expected. Both factors reinforced market expectations of a rate hike by the Bank of Japan at its September meeting, with the swap market now pricing in an approximately 80% probability of a rate hike. This expectation is the main driver of the yen's strength.

The pound gave back some of its gains against the dollar on Friday, but the pair still ended the week up more than 0.60% at 1.3640, despite disappointing UK retail sales and improved US business activity in August. It retreated to the 1.3600 range after hitting a new high above 1.3670 earlier. The pound's pullback came after two consecutive days of gains, with a moderate strengthening dollar and weak UK data also weighing on the downside. The Australian dollar regained upward momentum against the US dollar after a slight decline the previous day due to weak Australian employment data, climbing to a new high of 0.7180, its highest level since early June. The spot price closed at 0.7170 at the end of the week, up nearly 1.23%, marking its seventh consecutive week of gains supported by fundamentals.

International crude oil prices rose sharply last week, with WTI crude surging nearly 6%! On Friday, crude oil prices traded above $86 a barrel, on track for a second consecutive week of gains, as investors assessed signs that Iran might seek to end its conflict with the United States. Iranian President Masoud Pezeshkian stated that Tehran hopes to end the war while maintaining a strong stance, describing the existing memorandum with Washington as a victory for Iran.

Before the weekend, the cryptocurrency market saw nearly $2 billion in liquidations, the largest since February 5th. Short liquidations reached $1.75 billion, the largest since the leveraged cleanup on October 10th, as traders betting on a decline (shorts) bought back assets to reduce losses. This buying spree is expected to further push prices higher. The short squeeze forced Bitcoin (BTC) up more than 5% after this move, briefly climbing above $68,000, its highest level since June 2nd. The top cryptocurrency saw $1.14 billion in liquidations, with short liquidations accounting for $1.11 billion.

U.S. Treasury yields rose across the board, with the 2-year Treasury yield, most sensitive to changes in the federal funds rate, rising 5 basis points (bps) to 4.24%, while the benchmark 10-year Treasury yield rose nearly 3 basis points to 4.474%. The yield on the 30-year US Treasury bond continued to be the focus of major financial news websites. Despite the US Treasury's announcement of increasing the repurchase program at the long end of the yield curve from $2 billion to $4 billion, the yield still closed at 5.276%, up 2.5 basis points from the previous week.

Market Outlook for This Week:

This week (August 24-28), the annual Jackson Hole Economic Symposium will officially begin, coinciding with the release of core inflation, employment, and consumption data from Europe and the US, as well as earnings reports from tech giants such as Nvidia.

The US will release the Chicago Fed National Activity Index to assess the overall strength and contraction of the US economy. Simultaneously, it will release data on the auction of short-term Treasury bonds for March-June. The yields and subscription rates at these auctions directly reflect the tightness of dollar liquidity, providing direct guidance for short-term interest rates and foreign exchange rates.

The Reserve Bank of Australia will release the minutes of its August monetary policy meeting, maintaining the Australian dollar interest rate at 4.35%. The minutes will reveal future policy inclinations and guide the Australian dollar and commodity price movements. Australia's July CPI inflation data will directly determine the Reserve Bank of Australia's (RBA) subsequent interest rate pace, impacting sentiment in Asia-Pacific markets.

The biggest highlight this week is Federal Reserve Chairman Warsh's first speech at the Jackson Hole Economic Symposium. His policy and economic outlook will reshape global market expectations and set the tone for this round of central bank symposiums and subsequent market trends (the symposium will be held from August 27-29).

Risk Warning: Key Data and Policy Variables to Watch

In addition to core economic data and major events, investors should be wary of three potential risks:

First, there is a possibility of unexpected policy shifts in statements from Jackson Hole officials. If the Fed Chairman's first speech at the symposium deviates from market expectations, it will trigger significant volatility in stock, currency, and commodity markets.

Second, Nvidia's earnings report may fall short of expectations, potentially leading to a correction in the US technology sector and suppressing global risk asset sentiment. Third, unexpected fluctuations in inflation and employment data in Europe and the US will quickly revise Fed policy expectations, causing short-term market volatility.

Conclusion:

Volatility will increase significantly next week. It is advisable to avoid heavy betting on the Jackson Hole symposium and wait for the speeches to be released before making any moves. Gold is in an uptrend, but its recent gains have been substantial, making a rapid pullback highly likely; chasing the price higher is not advisable. Stocks: The global market is in a state of "improving interest rates but high policy uncertainty," so a swing trading approach is recommended; avoid betting on a single direction. Geopolitical risks in crude oil cannot be ignored; a gap down is possible at any time.

Safe-haven buying versus policy shift: Who will be the next "manipulator" for the dollar?

Escalating US-Iran tensions have provided short-term support for the dollar through safe-haven buying, but weak employment and inflation data have significantly reduced the expectation of a September rate hike from 47% to 35%. Coupled with market concerns about the US fiscal situation, the dollar's medium-term outlook remains under pressure.

Last week, the dollar index rebounded slightly after a continuous decline in the first half of the week, mainly benefiting from safe-haven demand triggered by geopolitical tensions between the US and Iran. US President Trump announced that he had no intention of extending the expiring agreement with Iran and used the US maritime blockade of Iranian ports as evidence that Washington has leverage to exert pressure, while reiterating his claim that the Strait of Hormuz is US territory and under complete US control.

Iranian Foreign Ministry spokesman Bagai pointed out that the agreement has been delayed due to the complex security situation and "obstructive actions by destructive factors," emphasizing that the United States must first lift the blockade.

The tough statements from both sides have perpetuated the geopolitical risk premium, providing safe-haven buying support for the US dollar in the short term. However, the impact of geopolitics on the US dollar is two-sided: on the one hand, safe-haven sentiment directly benefits the dollar; on the other hand, rising energy prices may exacerbate inflation concerns, thereby affecting the Federal Reserve's policy path, making this transmission chain more complex.

Monetary Policy: Rate Hike Expectations Continue to Cool, Dollar Under Medium-Term Pressure

The biggest headwind facing the US dollar index comes from the shift in monetary policy expectations. Unexpectedly weak US non-farm payroll data in July, coupled with moderate consumer price inflation data released last week, has significantly weakened market expectations for a Fed rate hike next month. The CME FedWatch tool shows that market expectations for a rate hike at the September meeting have fallen from 47% the previous month to 35%.

The US dollar has suffered a significant blow in recent weeks, with its overall trend continuing to weaken, pushing the dollar index below the bottom of its August consolidation range to its lowest level since early June. "Weak US data reports are dampening expectations of Fed tightening," and the market is pricing in too much tightening by the end of the year.

Meanwhile, there are clear signs of market concern about US fiscal developments, which are seen as reflected in the steepening of the US Treasury yield curve. The dual pressures of fiscal concerns and a shift in monetary policy expectations constitute the fundamental backdrop for the dollar's medium-term downward pressure.

The dollar's recent weakness is mainly supported by yen intervention and the impact of Fed policy risks, but it is expected to regain upward momentum. Supporting factors include the continued resilience of US economic growth and the still advantageous interest rate differential with other major economies.

The dollar is expected to gradually strengthen against most G10 currencies and some emerging market currencies, but it is emphasized that conditions for further significant gains are not yet present, especially lacking the key driver of a rapid Fed rate hike cycle.

The US dollar has room for a "slow climb," but the market may experience volatile movements during the key US data release period leading up to the September FOMC meeting, and investors should be wary of short-term fluctuations.

The dollar is expected to weaken in the medium to long term. Key drags include escalating US fiscal concerns: the 30-year Treasury yield rose to 5.216% (the highest since 2001), with investors demanding higher compensation to absorb the expanding deficit; meanwhile, investor allocations to dollar assets are already high, creating a structural headwind.

As US data becomes more dovish in the coming months, the Federal Reserve may signal that it will maintain interest rates, pushing yields down and leading to a broader weakening of the dollar.

Conclusion:

The US dollar index is currently in a complex, mixed situation. Geopolitical tensions between the US and Iran provide safe-haven buying support for the dollar, but this positive factor is being offset by rapidly fading expectations of a Fed rate hike. Weak US employment data, moderate inflation, and market concerns about fiscal conditions collectively constitute the fundamental logic for the dollar's medium-term downward pressure.

US Treasury Debt Surpasses $40 Trillion Mark, Ushering in a Major Shift in the Global Financial Landscape

According to official real-time data from the US Treasury Department, the US debt has surpassed $40 trillion. While there has been no official announcement, the data is authoritative. This situation stems from multiple factors, including long-term fiscal imbalances, multiple tax cuts, crisis stimulus, and high-interest debt rollover. The massive debt exacerbates the US fiscal burden, drives up financing costs, intensifies political maneuvering, weakens the dollar's credibility, forces the diversification of the global reserve system, and continues to impact the global financial landscape.

A debt of $40 trillion means that the US debt far exceeds its annual GDP, with a debt ratio exceeding 120%, significantly surpassing the internationally accepted 60% sovereign debt safety threshold. This figure is the inevitable result of decades of fiscal and policy imbalances combined with crisis stimulus in the US, and it also signifies that the US fiscal system and the global financial system have entered a new high-risk phase.

Multiple deep-seated reasons have fueled a massive $40 trillion debt.

The snowballing US debt problem stems from a long-term structural imbalance in fiscal revenue and expenditure: rigid expansion of spending and weak revenue growth, resulting in persistently large fiscal deficits that can only be filled by continuously issuing more government bonds.

Various unforeseen crises have become key catalysts for this debt surge. During the 2008 financial crisis and the 2020 public health crisis, the US launched massive fiscal relief and economic stimulus plans, which inflated the debt in the short term. More importantly, after the crises, the temporary fiscal spending became a habit, failing to be phased out in an orderly manner, and the total debt only increased.

Furthermore, in the current high-interest-rate environment, the huge amount of existing debt generates enormous interest payments. Fiscal funds must prioritize repaying principal and interest, forcing continuous borrowing to refinance existing debt, creating a vicious cycle of debt snowballing. The US dollar's status as the global reserve currency provides a global market for US Treasury bonds, which also provides the foundation for the US to borrow without limit.

Behind the $40 trillion debt, multiple hidden dangers lurk within the US.

With US debt exceeding $40 trillion, the most direct pressure is reflected in the fiscal burden. Currently, annual interest payments on US Treasury bonds have surpassed the defense budget, becoming the largest rigid expenditure in federal finances. A large amount of tax revenue is consumed by debt interest, severely squeezing public investment in infrastructure, people's livelihoods, and technology, thus constraining the long-term economic development potential of the US. At the same time, the continuous large-scale issuance of debt has led to a surge in the supply of US Treasury bonds, easily pushing up medium- and long-term yields, raising overall financing costs, directly impacting corporate investment and financing, residential mortgages, and consumer credit, and exerting sustained pressure on the real economy.

On the political level, the massive debt has made the US debt ceiling debate a regular occurrence. Whenever the debt approaches a critical point, the two parties engage in fierce wrangling, with repeated government shutdowns and soaring policy uncertainty, continuously disrupting market expectations and financial stability. As the debt continues to expand, the willingness of overseas central banks and institutions to allocate US Treasury bonds has gradually cooled, and the proportion of foreign holdings in US Treasury bonds has continued to decline, slowly eroding the global credit foundation of US Treasury bonds. However, in the short term, relying on the dollar's hegemonic status, there is no substantial risk of default for US Treasury bonds; the risk lies more in the weakening of long-term credit and the decline in fiscal resilience.

The Profound Impact of US Super Debt on Global Financial Markets

As the anchor for global asset pricing, the impact of US Treasury bonds exceeding $40 trillion will spill over into global markets. The massive supply of US Treasury bonds continues to push up yields, suppressing valuations of global stock markets, commodities, and non-US currencies, exacerbating volatility in global financial markets. Simultaneously, the long-term weakening of US Treasury credit is forcing the global foreign exchange reserve system to diversify rapidly. Central banks are continuously increasing their holdings of safe-haven assets such as gold and non-US bonds, gradually reducing their dependence on the US dollar and US Treasury bonds, and continuously impacting the dollar-based financial system that has been in place for decades.

Conclusion:

Overall, the massive US debt of $40 trillion is the result of long-term fiscal imbalances, short-sighted policies, and crisis-induced stimulus. While there is no short-term risk of default, the backlash against fiscal policy, persistently high financing costs, and weakening dollar credit will become the long-term norm. Given the significant political resistance to US tax increases and spending cuts, the debt snowball is unlikely to reverse and will continue to expand, becoming a core variable influencing the global macroeconomy, asset prices, and financial landscape in the long term.

Economic Pressure from the US-Iran Conflict May Force a Glimmer of Hope for Negotiations

The nearly six-month-long US-Iran conflict appears to have reached its worst possible outcome. The 60-day window for negotiations following the memorandum of understanding reached by both sides has expired, with no renewal arrangements made. The US and Iran have officially entered a stalemate with no apparent negotiations.

While the US has abandoned high-intensity military strikes, it has shifted to a slow-paced strategy of maritime blockade combined with economic pressure. This could be a turning point in the current military conflict. This approach is continuously damaging the Iranian economy and disrupting shipping in the Strait of Hormuz, injecting a risk premium into the oil market.

Diplomatic Channels Closed, Gulf Situation Continues to Deteriorate

During the unfolding situation, there were reports within the US of positive dialogue, but Trump publicly denied this, clearly stating that there is currently no time and no plan to initiate negotiations with Iran, and the maritime blockade remains fully in effect. The Iranian military issued a strong warning, cautioning Gulf states not to assist US operations, otherwise it would be tantamount to direct military intervention.

Regionally, after suffering multiple attacks on its merchant ships, the UAE announced a complete suspension of all trade and financial ties with Iran.

Meanwhile, Israel's airstrikes on Syrian military bases, publicly condemned by the UAE, have further compressed diplomatic space amidst a multitude of regional conflicts. The US military has deployed the USS Washington to the Middle East to replace the USS Lincoln, strengthening its regional military presence.

Shipping through the Strait of Hormuz is disrupted, forcing crude oil trade to detour.

As a crucial global energy route, the Strait of Hormuz continues to see low traffic volumes, far below levels seen during periods of relative calm. Continued missile and ship attacks have heightened risk aversion among shipping companies, with many vessels turning off their transponders to avoid risk. The southern route, promoted by the US, is almost entirely unused.

The UAE is using a shuttle transshipment model to maintain crude oil exports, but vessels affiliated with the Abu Dhabi National Oil Company remain frequent targets. Detours, transshipments, and increased war insurance costs directly drive up the overall cost of Gulf crude oil exports.

Even as oil-producing countries strive to maintain exports, declining transportation efficiency, rising freight rates, and the market's continued pricing in the possibility of rising energy inflation mean that crude oil prices are being continuously supported by geopolitical risk premiums. If the frequency of attacks in the Strait of Hormuz increases again, oil prices could rise further.

The maritime blockade is showing real destructive power, causing enormous economic strain on Iran.

The economic damage caused by the blockade has been publicly confirmed by Iranian officials and business leaders. The head of the Iran-China Chamber of Commerce disclosed that with maritime transport disrupted, a large amount of goods have been forced to be transshipped by land, with the cost of transporting a single container soaring from $3,000 to $12,000. Approximately 2 million containers annually will incur an additional $18 billion in logistics costs.

Iran's total non-oil export profits are only $10 billion; the additional costs of the blockade can almost completely wipe out this profit. He estimates that the economic damage from 40 days of fighting is less than the losses caused by the current blockade.

Iranian President Pesashkyan has also publicly acknowledged that the maritime blockade has cut off the country's import channels, leading to a shortage of government funds, making gasoline imports unsustainable, and resulting in fuel shortages and long queues at gas stations. Calculations show that the blockade is costing Iran approximately $435 million daily.

A senior U.S. Treasury sanctions official previously commented that it's rare for sanctioned countries' leaders to publicly acknowledge severe economic damage, and the effects that airstrikes failed to achieve are gradually being realized through blockades.

Market Analysis: Without apparent negotiations, a war of attrition may force Iran to seek peace.

Currently, the U.S. and Iran have reached a point where talks seem impossible, with the U.S. slowing down the pace. The U.S. is no longer pursuing immediate large-scale military retaliation, choosing instead to prolong the conflict, relying on blockades and sanctions to continuously weaken Iran's national strength, rather than rushing into diplomatic compromise. In the short term, Iran will likely continue to attack merchant ships in the Strait as a countermeasure, and the game will not end quickly.

As time goes on, if the fuel shortage and erosion of export profits continue to worsen, and domestic economic pressure accumulates, there is a possibility that Iran will proactively signal for negotiations.

In the oil market, this scenario will see oil prices retain a geopolitical risk premium. On the one hand, as long as the attacks in the Strait continue, concerns about supply disruptions will continue to support oil prices; on the other hand, if economic pressure on Iran forces a glimmer of hope for negotiations, the risk premium will quickly dissipate, and oil prices will face downward pressure.

Conclusion:

In the short term, Strait of Hormuz traffic data and US-Iran statements remain the dominant variables for oil prices. If traffic volume remains low, crude oil volatility will be high. In the medium term, the speed of progress on alternative export routes will determine whether the supply gap can be filled. If substantial diplomatic progress is made, the oil price risk premium may decline; if the stalemate continues, concerns about the supply gap will intensify. The biggest tail risk is an unexpected escalation of the conflict, including damage to European targets or power lines. It is necessary to monitor traffic data and insurance costs, rather than just focusing on prices.

In the short term, crude oil is likely to maintain high-level fluctuations. The turning point depends on the progress of the blockade against Iran and whether the intensity of attacks in the Strait of Hormuz escalates further.

US long-term bond repurchase suddenly doubled; gold experienced a sudden $100 fluctuation?

Last week, the market experienced a significant cross-asset repricing. Previously, long-term Treasury bonds had been under sustained pressure, with the yield on 30-year US Treasury bonds rising to near its highest level since 2007. The US Treasury subsequently announced an expansion of its long-term nominal Treasury liquidity support repurchase program, raising the single repurchase limit for both 10-20 year and 20-30 year maturities from $2 billion to at least $4 billion, scheduled to take effect on September 9th. Following the announcement, long-term Treasury yields quickly fell, with the 30-year yield dropping to approximately 5.20% and the 10-year yield to around 4.63%. This change in interest rates quickly translated into the precious metals market, with spot gold currently testing around $4,528 per ounce.

Understanding this gold price movement hinges not on simply establishing a linear logic that "Treasury bond purchases equal gold price increases," but rather on re-examining the actual holding costs of gold. Gold itself does not generate coupon income; therefore, the market typically compares the opportunity cost of holding gold with that of holding high-credit-rating fixed-income assets. Previously, the 30-year Treasury yield rose to around 5.3%, and long-term inflation expectations did not rise at the same rate, indicating a tightening real interest rate environment. This is a key reason why gold failed to exhibit its traditional safe-haven characteristics despite persistent geopolitical risks.

On August 18, the 30-year US Treasury yield rose to around 5.327%, its highest level since 2007, while the 10-year yield was also around 4.7%. When the US Treasury announced an expansion of long-term repurchase agreements, the market first adjusted the liquidity risk premium and term premium of long-term bonds, rather than immediately reassessing the Federal Reserve's policy rate.

This distinction is crucial. Treasury repurchase agreements are debt management and liquidity support measures, not equivalent to the Federal Reserve's asset purchases, and cannot be simply interpreted as quantitative easing. Their direct effect is to improve the liquidity of some existing bonds, provide additional buyer demand, and reduce the liquidity compensation required by the market during periods of concentrated supply pressure.

As of the end of July, the cumulative scale of the US Treasury's long-term nominal bond liquidity support repurchase agreements had reached approximately $95 billion, indicating that the repurchase mechanism itself is not a new, temporary tool. The truly noteworthy aspect of this change is the significant increase in the size of single long-term operations.

This market movement once again highlights an easily overlooked fact: there is no stable one-to-one correspondence between gold and nominal Treasury yields; real interest rates are the more important intervening variable.

During the significant decline in gold prices on August 18th, the market observed a rapid rise in long-term Treasury yields, while long-term inflation expectations showed relatively limited changes. When nominal yields rise faster than inflation expectations, real yields increase, and the relative opportunity cost of non-interest-bearing assets increases accordingly. Data at that time showed that the 10-year inflation breakeven rate was approximately 2.30%.

The logic reversed on August 19th. After the US Treasury expanded its repurchase operations, the 30-year yield fell significantly from the previous trading day's closing level of 5.284%, compressing the term premium previously priced in by the market. Simultaneously, the dollar index weakened briefly, allowing gold to be repriced through both the interest rate and currency pricing channels.

However, this does not mean that long-term interest rate risk has disappeared. Fiscal deficits, the scale of Treasury bond supply, corporate financing needs, and energy prices may continue to influence long-term maturity premiums. The US Treasury's quarterly financing arrangements announced in early August maintained large-scale debt issuance while continuing to improve secondary market liquidity through repurchase agreements.

Therefore, gold's current price action does not simply reflect an increase in the "safe-haven premium," but rather a concentrated correction following the rapid adjustment in real interest rates and the previous trading day's valuation compression.

The most noteworthy contradiction in the long-term bond market is the simultaneous existence of increased liquidity support and structural supply pressures.

Increasing the scale of repurchase agreements can improve market depth for existing bonds of specific maturities, but it cannot directly change the overall demand for fiscal financing. Previous quarterly arrangements showed that liquidity support repurchase agreements have consistently been in the tens of billions of dollars range, while the overall size of the US Treasury market has exceeded $30 trillion. Therefore, relative to the overall market stock, repurchase agreements are more appropriately understood as a micro-structural tool rather than a tool to change the fundamentals of debt supply and demand.

On the other hand, energy prices remain a variable in inflation. Recent high oil prices and heightened geopolitical tensions in the Strait of Hormuz have increased uncertainty regarding transportation and energy supplies, prompting bond investors to continue demanding higher long-term inflation risk compensation. Earlier on August 19th, the 30-year US Treasury yield remained around 5.22%, and the 10-year yield around 4.625%, indicating that while the long-term bond market has seen some recovery, absolute interest rates remain high.

This places gold in a complex macroeconomic situation: increased energy and geopolitical risks drive demand for safe-haven assets and inflation hedging, while high real interest rates increase the opportunity cost of holding gold. This coexistence explains the significant intraday volatility in gold prices in recent trading days, rather than a smoother trend driven by a single macroeconomic variable.

Conclusion:

The synchronized repricing of gold, long-term Treasury bonds, and the US dollar following the Treasury's announcement suggests that this round of volatility is primarily driven by macroeconomic interest rate factors, rather than independent factors within the gold market. Therefore, future observations should focus on real yields, term premiums, Treasury auction demand, energy prices, and the Fed's description of the policy function in the meeting minutes.

Overview of Important Overseas Economic Events and Matters This Week:

Monday (August 24): New Zealand Q2 Retail Sales (QoQ); Canada National Economic Confidence Index; US July Chicago Fed National Activity Index

Tuesday (August 25): Japan June Leading Economic Index Final (MoM); US August Conference Board Consumer Confidence Index; US July New Home Sales (Annualized MoM); Reserve Bank of Australia Releases August Monetary Policy Meeting Minutes; Richmond Fed President Barkin Speaks on "The Mysterious US Economy"

Wednesday (August 26): US Last Week's API Crude Oil Inventory Change (10,000 barrels); Australia July Westpac Leading Economic Index (MoM); UK August CBI Retail Sales Expectations Index; US July Personal Consumption Expenditures (MoM); US July Durable Goods Orders Preliminary (MoM); July Personal Consumption Expenditures Price Index (MoM); US Q2 Real GDP Revised (Annualized QoQ); US July Personal Income (MoM); US EIA Crude Oil Inventory Change (10,000 barrels)

Thursday (August 27): Australia's Second Quarter Private Capital Expenditure (Quarterly Rate); US Initial Jobless Claims (Thousands)

Friday (August 28): Japan's July Unemployment Rate; Japan's August Tokyo Consumer Price Index (Year-on-Year); Eurozone's August Industrial Sentiment Index; US August University of Michigan Consumer Sentiment Index (Final).

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