Treasury to Double Debt Buybacks Amid Weak Demand for Long-Term Bonds
The U.S. Treasury Department announced it will double its buyback of long-term bonds, increasing the amount from $2 billion to at least $4 billion starting September 9. This move comes as investors have largely avoided buying Treasuries since late June due to rising yields and shifting market dynamics. In response, bond yields fell sharply—10-year yields dropped by 6 basis points to 4.647%, while 30-year yields declined by 9 basis points to 5.196%. The decision reflects a lack of demand for long-term bonds in the private sector and has led traders to view this as an interventionist approach. Despite the immediate market reaction, analysts argue that Treasury buybacks do not address underlying issues such as high term premiums or competition from corporate debt. Additionally, they note that increased government borrowing continues unabated into a shrinking pool of willing buyers at current yields. Federal Reserve Chair Kevin Warsh has previously expressed preference for open-market rate-setting over Treasury interventions. The move is seen by some critics as merely shifting the burden of bond purchases to the government rather than addressing structural imbalances in debt demand.
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Topics: bond market Scott Bessent Treasury buybacks U.S. debt