To The Moon

I have been watching the Treasury market closely these past few weeks, and the latest move feels like a quiet admission that things are getting uncomfortable at the long end of the curve. Treasury just doubled the size of its liquidity-support buybacks in the 10-to-20-year and 20-to-30-year sectors to at least $4 billion per operation. This comes right after the 30-year yield pushed toward levels we haven’t seen in nearly two decades and the 10-year settled in the mid-4.6% range.

On paper, these buybacks are still framed as liquidity tools helping dealers offload older, less-traded bonds. In practice, the timing and the sudden upsizing tell a different story. When yields keep rising even on the day of a scheduled buyback, and Treasury responds by expanding the program off-calendar, it looks to me like an attempt to put a soft ceiling under long-term rates. The absolute dollars involved remain small next to the overall market, but the signal is clear: officials are willing to lean against disorderly spikes.

That brings us to the bigger question. Is the relentless rise in government debt something investors should genuinely worry about? My view is yes though not in the “imminent crisis tomorrow” sense that some headlines scream. Total public debt has now crossed the $40 trillion mark. Interest costs have ballooned into one of the largest budget items, competing with or exceeding major entitlement programs. Debt held by the public sits near 100% of GDP and is projected to keep climbing under current policy. History shows countries can live with high debt loads for a long time when they issue the world’s reserve currency, but the cost of that privilege is rising. Higher long-term rates feed back into larger deficits, which require more issuance, which can push rates still higher. That’s the classic debt-spiral risk, and I don’t think we’re immune just because we’re the United States.

Buybacks can smooth the ride and buy time. They cannot fix the underlying math of spending consistently outrunning revenue. At some point markets will demand a higher term premium for holding long-duration Treasuries if fiscal discipline remains elusive. We’ve already seen flashes of that this year.

How I’d Think About Hedging

If you’re concerned that long-term rates stay elevated or grind higher, and that fiscal pressures keep the pressure on, here are the approaches I find most practical right now.

1. Direct rate hedges via inverse Treasury ETFs  

These are the cleanest way to profit if bond prices fall (yields rise).  

TBT (ProShares UltraShort 20+ Year Treasury) – 2x inverse of long bonds  

TMV (Direxion Daily 20+ Year Treasury Bear 3X) – more aggressive 3x version  

TBF (ProShares Short 20+ Year Treasury) – single inverse, less leveraged  

PST (ProShares UltraShort 7-10 Year Treasury) – focuses on the intermediate part of the curve  

I treat these as tactical positions, not permanent holdings. They decay over time in sideways or falling-rate environments, so size them carefully.

2. Reduce duration and add floating-rate exposure  

Shift existing bond holdings toward shorter maturities and instruments that reset with rates.  

BIL or SGOV – ultra-short T-bill ETFs that barely move when rates rise  

FLOT (iShares Floating Rate Bond) and TFLO (iShares Treasury Floating Rate)  

BKLN or SEIX – senior loan ETFs that benefit from higher short-term rates  

3. Inflation-linked protection  

If fiscal deficits eventually translate into higher inflation, TIPS make sense.  

TIP (iShares TIPS Bond ETF)  

SCHP (Schwab U.S. TIPS ETF)  

VTIP (Vanguard Short-Term Inflation-Protected Securities) for lower duration risk  

4. Real assets and hard-currency alternatives  

Gold has historically done well when confidence in fiscal management wobbles.  

GLD or IAU for straightforward gold exposure  

I also like selective commodity or energy exposure (XLE or individual names in the energy sector) if higher rates coincide with sticky inflation.

5. Equity tilts that historically handle rising rates better  

Financials tend to benefit from steeper curves and higher net interest margins.  

XLF (Financial Select Sector SPDR)  

Specific large banks with strong deposit franchises  

There are also dedicated rising-rate equity ETFs such as EQRR (ProShares Equities for Rising Rates) and FDRR (Fidelity Dividend ETF for Rising Rates) that systematically tilt toward sectors and stocks correlated with higher yields. Value-oriented funds (VTV or IWD) have often held up better than pure growth in these environments.

Treasury’s expanded buybacks are a useful short-term stabilizer, but they don’t change the long-term trajectory of the debt. Rising government debt is a legitimate concern—mainly because it raises the risk of persistently higher term premiums and reduces the government’s flexibility in the next downturn. I wouldn’t abandon Treasuries entirely; the dollar’s reserve status still gives the U.S. enormous leeway. But I would keep duration shorter than usual, maintain some explicit hedges against further rate spikes, and hold a core of real assets and quality equities that can navigate a higher-rate, higher-debt world.

None of this is a call for panic. It’s a call for realism. Markets can stay complacent longer than expected, yet the cost of being unprepared if long rates keep pushing higher is now large enough that thoughtful hedging feels prudent rather than speculative.