Citadel warns Treasury bond buybacks may weaken dollar, fuel inflation

Citadel Securities has raised concerns over the U.S. Treasury Department’s decision to expand its long-dated bond buyback program, labeling it as “financial repression” that could potentially weaken the dollar and drive up inflation. The Treasury announced an increase in the maximum size of buybacks for 10- to 30-year securities from $2 billion to at least $4 billion per operation. This policy, effective from September 9 through November 4, 2026, aims to support liquidity amidst a segment of the bond market that has experienced significant selling pressure. The expansion, however, has sparked debate about its potential macroeconomic impacts. Markets have reacted to Citadel’s warning by adjusting expectations for inflation and currency stability. These developments appear to be consistent with scenarios where a weaker dollar could make gold an attractive hedge, as gold prices often rise during periods of currency depreciation and inflationary pressures. Current market pricing suggests that such macroeconomic indicators are influencing gold price predictions for August 2026. The increased bond buyback program has already affected the market, lifting long-dated Treasury prices and pus...