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US 30-year yields fall after Treasury expands debt buybacks
Treasury said it will increase longer-term buyback operations to at least $4bn, effective September 9 through November 4.
Long-term borrowing costs in the United States eased on Wednesday after the Treasury Department announced it would buy back more debt. The move followed a sharp rise in the 30-year bond yield, which hit 5.34% on Tuesday, the highest level in nearly 20 years, before falling to 5.18%.
According to BBC Business, yields influence not only what the US government and large corporations pay to borrow, but also consumer borrowing rates tied to Treasury markets, including mortgages, car loans, and credit cards. The recent surge has been linked to higher oil prices tied to the US-Iran war, with investors also concerned about inflation and broader worries about government debt and heavy AI-related corporate borrowing.
The Treasury said its intervention reflected a desire to provide greater liquidity support for longer-term bonds. It plans to increase buyback operations by at least double, from $2bn to $4bn, with the expanded program running from September 9 to November 4.
Analysts cited by BBC Business said the additional purchases appear aimed at relieving pressure on long-term borrowing costs, though Oxford Economics cautioned the size of outstanding Treasury debt may limit any lasting impact. The article also noted that the average interest rate on 30-year fixed mortgages is 6.67%, according to Freddie Mac, compared with 7.7% in 2023, while minutes released by the Federal Reserve on Wednesday showed inflation concerns deepening among policymakers.