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Treasury doubles buyback sizes for 10- to 30-year Treasuries
The larger buybacks, starting Sept. 9 through Nov. 4, are set at least $4 billion per operation, after the 30-year yield hit a 19-year high of 5.34% on Tuesday.
The U.S. Treasury said it will double the size of buybacks for 10- to 30-year Treasury debt securities, aiming to support liquidity as long-dated yields remain elevated. The department will raise planned buybacks from $2 billion to at least $4 billion per operation, covering the 10-year to 20-year and 20-year to 30-year segments.
The updated buyback sizes will run from September 9 through November 4, the Treasury said. The change followed a major bond selloff that pushed the 30-year Treasury yield to its highest level since 2007, amid concerns about a potential escalation in the U.S.-Israel war with Iran and a deteriorating U.S. fiscal picture as total public debt nears $40 trillion.
Reuters reported that yields had climbed despite a previously scheduled $2 billion buyback on Tuesday for 20-year and 30-year bonds. After the Treasury announcement on Wednesday, yields fell further, with the 30-year yield dropping to as low as 5.187%, marking the largest daily drop in yields since late June, before last trading at 5.203% in midday trading.
The Treasury said the increase reflects its desire to provide greater liquidity support in longer-dated nominal sectors where it receives strong demand. Analysts cited by Reuters said the move indicates sensitivity to the risk that long-end yields above 5% could raise borrowing costs across the government and private sector, potentially keeping mortgage rates high and creating broader financial market dislocations.