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Treasury to raise long-term bond buyback cap to at least $4 billion
The 30-year Treasury yield slid to 5.19% on Wednesday in its biggest one-day drop in 10 months before rebounding early Thursday.
The US Treasury said it will step up purchases of long-term government bonds, including raising its long-term buyback cap to at least $4 billion beginning Sept. 9, a change it announced Wednesday ahead of its next scheduled update in November. Yahoo Finance said the move is intended to provide more support to a stressed part of the bond market.
The market reaction was sharp, with the 30-year Treasury yield falling to 5.19% Wednesday, its biggest one-day drop in 10 months, before rebounding early Thursday. Yahoo Finance also noted the dollar index fell 0.75% on Wednesday, its largest drop since April 30.
While the scale of the offer from investors was not described as suddenly increasing, the outlet said investors have historically offered far more bonds than Treasury was prepared to buy, with the multiple reaching about 18x earlier this spring and cooling to 11x by late July. The difference, according to Yahoo Finance, is Treasury’s willingness to absorb more of that supply.
Yahoo Finance said the buyback program is not new, having launched regular buybacks in 2024 and expanded long-term operations, including increasing frequency last year. The outlet characterized the effort as freeing dealers from holding harder-to-trade older bonds, while noting Treasury cannot remove underlying reasons investors may demand higher long-term yields, including inflation and heavy government and corporate borrowing.
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