YCC Already Active . . . . . . Bridging Gap to QE and Bitcoin Moon

Yield Curve Control is already here and the market loves it so far . . . . . . . what would make the Fed expand the Balance Sheet and launch QE?

Author

David Young
September 23, 2025

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Yield Curve Control Is Already Active . . . . . . And It’s Working So Far . . . . . . . . But When QE?

In a recent post I took a look at precisely what Treasury Secretary Bessent did at the end of July and the market impacts. Let’s face it - UST is nearly comatose, Bond VOL is essentially at historic lows, and relative to other nations longer duration yields in America have been very subdued lately. But why?

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Let’s go back and take a quick look at some of the data presented by Bessent in late July:

To recap again:

  • “for the next several quarters” meaning Bessent is saying that on longer duration he’s fine with maintaining this schedule for not months but possibly years

  • Bessent has said that auction sizes are not increasing AND the Treasury will be buying longer duration debt as well (and SOMA is still in there)

This was the rollout of Yield Curve Control. It’s already here. It’s working so far.  

My senses are that much of the Bitcoin community thinks this is gibberish and/or has yet to fully consider and grasp what is taking place. Let’s go back to one of the most useful tools around in my view - the comparison of change in Global M2 to change in Bitcoin from BitcoinMagazinePro.com:

The Red Rectangle above represents about 9 months of time. During that time the rate of change of Global M2 did not kick into high gear and stay that way for a sustained period, and you can see the associated price action for Bitcoin (remember that is YOY % Change shown).

The Blue Rectangle shows how right now Global M2, though rising, is not rising sharply on a relative basis and in a sustained manner as it has at times previously (the light blue lines going near vertical).

A lot can happen to the Bitcoin exchange rate in nine months or even in less than one month as we have seen. This begs the question of when the market might expect or anticipate Global M2 rising at the margin at rates that have rejuvenated Bitcoin previously. 

SLR done. Pressure being applied to the Fed in multiple ways (regardless of whether you agree or not politically or otherwise). Miran installed. Powell out in May of 2026. So - if we are thinking logically and realistically in terms of timelines and getting things done in DC, the current administration might have pretty good control of the Fed (and in front of the public) by June of 2026.  

Bessent’s Flex just committed to no auction size increases and BOMO stepping in and buying longer duration as well. The market likes it so far quite a bit. So - the question now is what will derail Bessent’s plan and force the use of other tools to keep rates below levels where they will destroy America? This is the key question in my view.

I’m sensing BanQE is the backup plan to Bessent’s YCC in motion. Perhaps Balance Sheet Expansion only arrives if/when Bessent no longer has the capacity internally (BOMO, TGA) to adequately suppress longer duration yields. Control of the Fed handles the short end and forcing steepness. What would cause LT yields to rise beyond Bessent’s ability to control them?

Here are a few stabs:

  • Organic and credible economic growth and persistent inflation could absolutely put intense pressure upwards on longer duration UST

  • Budget deficits expanding to the point where the market questions Bessent’s auction sizes and schedules

  • a black swan or event that threatens UST liquidity, banking plumbing, or draws in the U.S. to help other nations in a very significant way

  • bank reserves dwindling below $3T and obviously staying there

Unless one or some of these things happen before June, the current administration optically won’t even yet be in a position to expand the balance sheet.

Ok, so what about Gold and Silver? Aren’t they rallying hard because of money printing? Not necessarily. Money Flow. Accumulation/Distribution. GLD and SLV have been doing their thing and when the setups are there they get bought hard. Bitcoin has provided setups . . . . . . . but follow through has been lacking.  

Will longer duration yields rise sharply? Why? How? When? These are critical questions for anyone that wants to anticipate or analyze if/when yields force Bessent to seek and receive assistance from the Fed. Balance Sheet expansion is not the only Bitcoin catalyst . . . . . . but it is the most potent.