September 22, 2025

(WHAT TREASURY SECRETARY BESSENT COULD DO IN RELATION TO GOLD & BONDS)

September 22, 2025

Hello everyone

WEEK AHEAD CALENDAR

MONDAY, SEPT. 22

Euro Area Consumer Confidence

Previous: -15.5

Forecast: -15.4

TUESDAY, SEPT 23

8:30 a.m. Current Account (Q2)

9:45 a.m. S&P Global PMI Composite preliminary (September)

10:00 a.m. Existing Home Sales (August)

10:00 a.m. Richmond Fed Index (September)

12:35 p.m. US Fed Chair Speech

Earnings: Micron Technology, Auto Zone

WEDNESDAY, SEPT 24

8:00 a.m. Building Permits final (August)

10:00 a.m. New Home Sales (August)

7:50 p.m. Japan BoJ Minutes

THURSDAY, SEPT 25

8:30 a.m. Continuing Jobless Claims (09/13)

8:30 a.m. Durable Orders preliminary (August)

8:30 a.m. GDP final (Q2)

8:30 a.m. Initial Claims (09/20)

8:30 a.m. Wholesale Inventories preliminary (August)

11:00 a.m. Kansas City Fed Manufacturing Index (September)

Earnings: Costco Wholesale, CarMax, Jabil

FRIDAY, SEPT 26

8:30 a.m. Personal Consumption Expenditure Price Index (August)

Previous: 2.6%

Forecast: 2.8%

10:00 a.m. Michigan Sentiment final (September)

MARKET UPDATE

S&P500

The index keeps pushing forward to make new highs. As I have been mentioning for quite a while now, there is still no indication of a top in place yet. So, the trend remains in place. However, risk is high, especially after the lengthy surge since April.

Resistance: 6685/00 and 6750/75

Support: 6570/85 and 6450/65

GOLD

Since the September 2 resolution to the upside, the big picture in gold remains positive. However, the short term appears stretched with momentum starting to slow, so we could see some consolidation/downside movement for a few weeks.

Resistance: $3705/15

Support: $3628/38 (a break/close here would argue that a top may be in place for a few weeks)

BITCOIN

It may not seem like it, but the recent gains Bitcoin has been making over the last few weeks can be seen as a correction. Taking a macro view, those gains are likely to eventually give way to a downside move. And that move could take us down to $105k or even below that.

Resistance: 117.9/118.4k

Support: 114.9/115.4 and 110.7/111/2k

WHAT ARE WE WATCHING THIS WEEK?

International PMI surveys -> could offer fresh clarity on growth momentum.

US PCE inflation figures -> warm to hot data could reignite USD strength and complicate the Fed’s rate cut narrative.

THE BOND MARKET TELLS THE STORY, with bond yields sitting at 4.15% as of 09/22/25

It’s quite curious, isn’t it, how the 10-year yield rose basically a day after the Fed meeting. The Fed cut rates by 25bps, and they are even considering two more cuts this year.

So, by year-end, the policy rate would be around 3.5%.

The bond market read the future script and assumed that borrowing would become easier, investment and consumption would rise, and inflation would surge.

To compensate for future inflation, the yield on the 10-year bond is rising. Yes, the move is small, but the direction is significant.

For the Treasury, the long-term rate (10-year) is far more important than the short-term rate. The Treasury cannot tolerate a high long-term rate because mortgage rates, credit card rates, car loans, and all other loans are based on the 10-year rate.

And, I need to add, that a large amount of government debt is also long-term.

Rising long-term rates mean higher government expenses, as they must pay more for borrowing.

What is one way the government can keep rates low, or near 4%?

It’s already been a topic of debate and tossed around in financial discussion groups.

Secretary of the Treasury, Bessent, could revalue the gold on the Treasury’s balance sheet. The U.S. Treasury holds about 8,000 tonnes of gold, and it is marked at a price of around $42 per ounce.

As we are all aware, the current market price is ~ $3,700 per ounce.

So, if the Treasury revalues its gold holdings, it will get over a trillion dollars in free cash for expenditure.

And what might Bessent do with this cash? He could stop issuing new long-term debt and instead meet long-term expenses with the revaluation money.

Only short-term debt would be issued, and no long-term debt would be needed for the next 18-24 months.

With long-term debt in the market decreasing, we would expect rates to fall, and the Treasury would then be able to borrow again at lower rates.

Is this a long-term fix for America’s financial mess, or just a band-aid?

It would make the garden appear well-manicured for a period, but weeds would start to reappear after a while.

In other words, after a couple of years, long-term rates will probably rise again, and they may go as high as 8%.

And the Treasury’s weapon of choice then is…

QE by the Fed – more money printing.

A $300 billion deficit in most months will quickly swallow $1 trillion in cash.

What’s the government’s main problem?