Treasury Secretary Bessent made news two weeks ago when he announced plans to expand the Treasury Department’s purchases of long-dated T-bonds.

The intention of that program is to switch more of the Treasury’s debt from long-dated instruments to shorter-term ones, lowering interest-rate costs. More importantly, it aims to minimize the economic damage to housing and other markets from high long-term rates. It is a nice idea, but the numbers are against him. And so is the message from gold prices.

Of the $40 trillion in total federal debt, about $32 trillion is held by the public. Of that, about $5.5 trillion has maturities longer than 10 years. A trillion is 1,000 times a billion. So changing the Treasury’s bond-buying program from $2 billion to $4 billion per refunding iteration is a drop in the long-term-bond market’s bucket.

And he is pointing his garden hose at a powerful headwind in the form of the message from gold prices, shown in the following chart. I highlighted that relationship three weeks ago, but the message is important enough to merit a rerun, this time with a longer-term look at the two.

Source: McClellan Financial Publications

Gold’s price action tends to be echoed in long-term interest rates about 20.5 months later. It is not a perfect crystal ball, just an amazing one. Sometimes a big event like COVID or the Federal Reserve doing $2.5 trillion in reverse repurchase agreements (see chart) can put a temporary thumb on the scale. But then the relationship starts working again.

Bond yields right now are at a point equivalent to where gold was at about $2,700. Gold prices went on to double from there. This does not mean numerical bond yields are going to double. It does not work that way. But there is going to be immense upward pressure on bond yields after this current sideways movement. Secretary Bessent’s little $4 billion purchases of T-bonds are not going to be enough to push back the tidal forces that gold is telling us about. 

For those looking to take out a new mortgage, I am sorry to be the bearer of bad tidings. Please don’t shoot the messenger. And for those employing a 60-40 stock-bond strategy, hopefully your bond holdings are not in really long-dated maturities. 

In our latest McClellan Market Report, we showed how the yield curve overall is scheduled to keep steepening until about July 2027. Steepening happens as long-dated debt yields rise faster than short-dated ones. The Treasury and the Fed can fight these forces a little, but they are powerful forces that will win out in the end.

This is an edited version of an article that first appeared at McClellan Financial Publications on Aug. 20, 2026.

The opinions expressed in this article are those of the author and the sources cited and do not necessarily represent the views of Proactive Advisor Magazine. This material is presented for educational purposes only.