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Treasury announces upscaled buyback operation for longer-term debt, sending yields lower
The Treasury Department on Wednesday said it will more than double the size of its government debt repurchases, sending yields sharply lower at a time of substantial market stress.
With fixed income markets under pressure and yields surging to levels not seen in nearly 20 years, the announcement targets the sensitive longer-duration part of the Treasury market.
Under the accelerated buyback, Treasury, led by Secretary Scott Bessent, will target the 10- to 20-year and 20- to 30-year portion of the market, which has seen a buyers' strike since late June. The government will "at least double" the maximum size of its buyback operations, from $2 billion to "at least" $4 billion, according to an announcement from the department.
US treasury doubles debt buyback to steady bond market amid inflation fears
Yields, at recent highs this week, dropped after treasury’s vow to ‘provide greater liquidity support’ to bond market
The US treasury is doubling its buyback of government debt in an effort to balance out the bond market and counterbalance investor concern over high inflation.
The yield rate on 10-year, 20-year and 30-year treasury notes all hit 20-year highs this week, with the 30-year treasury yield rising to its highest rate since 2007. The rapid rise was concerning news for borrowers as major loans, including mortgages, are backed by treasuries.
Yields dropped after the treasury department’s announcement on Wednesday morning. The agency said the policy “reflects Treasury’s desire to provide greater liquidity support” to the long-term bond market.
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