Treasury doubles bond buybacks as national debt tops $40 trillion for the first time
The surprise move came days after the 30-year yield hit its highest level since 2007, and briefly sent longer-term borrowing costs lower.
The U.S. Treasury Department said this week it will at least double the size of its bond buyback operations, a surprise intervention aimed at easing pressure on longer-term borrowing costs after the 30-year yield touched its highest level since 2007.
Treasury Secretary Scott Bessent's department said it would raise the size of each buyback operation to at least $4 billion from $2 billion, targeting securities in the 10-to-30-year range starting in September and running into early November. The announcement came the same week official figures showed the national debt had climbed above $40 trillion for the first time.
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The initial market reaction was sharp: the benchmark 10-year Treasury yield fell from around 4.68 percent to as low as 4.63 percent, while the 30-year yield dropped from roughly 5.26 percent to about 5.18 percent, as the prospect of the government stepping in as a larger buyer of its own long-dated debt eased some of the recent selling pressure.
That relief proved only partial. Yields on both securities drifted back up the following day as traders weighed the buyback plan against the broader forces that had pushed borrowing costs higher in the first place, including concerns about a widening budget deficit, inflation that has stayed above the Fed's target, and a wave of corporate bond issuance competing with Treasuries for investor demand.
Analysts described the buyback increase as a targeted, short-term tool rather than a structural fix for the pressures facing the bond market, noting that the government still needs to finance the same underlying deficit regardless of how it manages the mix of debt maturities it issues.
The episode added to a summer of unusually active involvement by the Treasury in the mechanics of the bond market, with officials signaling they are prepared to use further buybacks or other tools if long-term yields continue climbing toward levels that could ripple into mortgage rates and other consumer borrowing costs.