What is Treasury?

US entitlements, interest, and veterans benefits consumed 105% of all federal receipts through fiscal Q3 2026.

“Entitlements plus interest plus veterans benefits are right now through fiscal third quarter 105% of receipts.”

Hedge funds now own 8.5% of the US Treasury market, exceeding the holdings of Saudi Arabia, Japan, and China individually.

“Hedge funds are now 8 and a half% of the of the of the treasury market. They own eight and a half%. They're bigger than Saudi, they're bigger than Japan, they're bigger than China, they're bigger than all these guys.”

The Treasury's yield-curve operation, buying long-duration bonds with short-duration proceeds whenever 10-year yields approach 5%, functions as a de facto yield cap and is described as 'soft QE' distinct from Fed balance-sheet expansion but directionally equivalent.

“They're saying it's not going to go higher because if it starts going higher, we're going to buy the long duration with short duration.”

Luke Gromen on gold and the Treasury market: not destruction but collateralization.

“Gold at a high enough rate doesn't destroy the Treasury market. It collateralizes it.”

Luke Gromen explains China's reserve strategy: the goal is not yuan replacing the dollar but gold replacing the Treasury bond as the neutral global reserve asset.

“We don't want the yuan to replace the dollar. We want gold to replace the treasury bond as neutral reserve asset.”

Each 10-point increase in the MOVE bond volatility index is followed by a $28 billion increase in Treasury buybacks, per Michael Howell's analysis.

“Each 10 point increase in the move index basically leads to subsequently a 28 billion increase in Treasury buybacks.”

Luke Gromen explains why insurance companies are structurally locked out of Treasuries: private credit holdings cannot be sold without triggering unacceptable mark-to-market losses, trapping capital away from the sovereign bond market.

“The reason the only the outcomes raise a reason why the insurance industry didn't literally ape into 10-year treasuries over the last four months, it's because they can't.”

Luke Gromen on the endgame for US fiscal policy: significantly negative real rates.

“The only way the US is able to stop itself from a debt death spiral and with it the West more broadly is by keeping real rates negative. That's what we're talking about here ultimately. Today's move is ultimately just the latest down payment in moving towards significantly negative real interest rates.”

Luke Gromen explains the stablecoin Clarity Act as a Treasury funding mechanism: forcing stablecoins to hold T-bills creates a new captive buyer, enabling the Treasury to suppress short-term rates to around 60 basis points and escape a fiscal death spiral.

“I need to stuff stable coins with T- billills so I can cut the rate down to 60 basis points and boom.”

Luke Gromen on bondholders and what historical precedent demands.

“Bond holders lost all their money on a real basis basically from 46 to 51. All's too strong. They lost probably half to twothirds of their money on a real basis in five years. That's what has to happen.”