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Bond yields rise again after Treasury intervention plan starts in September
The Treasury plans to begin its buybacks on Sept. 9 and run through Nov. 4, while analysts cited inflation fears and rate expectations as drivers of the move higher.
Bond yields climbed for a second straight day on Friday, signaling limited market impact from the US Treasury's attempt to lower long-dated rates through buybacks. The 30-year Treasury yield was up about 2 basis points to 5.27% around midday, and the 10-year yield rose nearly 3 basis points to above 4.73%.
The intervention follows a Treasury announcement that it would at least double the amount of 10-year, 20-year, and 30-year Treasuries it buys back. Treasury Secretary Scott Bessent later indicated the purchases could be expanded further, with the operation scheduled to begin Sept. 9 and remain in effect through Nov. 4.
Bond market watchers have expressed skepticism that boosting long-dated buying can offset other forces pushing yields higher. Yahoo Finance reported that inflation fears, changes in Federal Reserve communication, and a surge in corporate debt issuance have all contributed to the increase.
The move also creates a potential tension for Fed policy expectations, as Fed Chairman Kevin Warsh has suggested higher yields could help raise borrowing costs through markets rather than requiring short term rate hikes. According to BNP strategists cited by Yahoo Finance, the measures are likely to struggle to counter declining Fed credibility or rising rate expectations, and Wilmington Trust added that the Treasury and Fed appear to be moving in opposite directions. The article also notes the national debt has topped $40 trillion as the Treasury pushes its buyback effort, which it has framed as a “debt buyback,” according to commentary included in the report.