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Treasury doubles buybacks of longer-term Treasurys to cool yields
The move starts Sept. 9 and runs through Nov. 4, lowering long end rates after 10-year yields topped 4.7% and the 30-year hit its highest since June 2007.
The U.S. Treasury announced it will at least double its planned buybacks of longer term government bonds, responding to a summer selloff that pushed long term yields to multi year highs. After the Treasury said long end yields had risen on concerns ranging from persistent inflation and higher oil prices tied to the war with Iran to worries about the U.S. budget deficit, it increased buybacks from a maximum of $2 billion to at least $4 billion, according to Yahoo Finance.
The Treasury said the change will begin Sept. 9 and continue through Nov. 4, the day after the midterm elections. In its announcement, the Treasury said the action is meant to provide greater liquidity support at the long end of the bond market, and it came just weeks after the agency issued its quarterly refunding update on near term debt management.
The announcement had an immediate effect, with longer term yields falling on Wednesday after earlier spikes. Yahoo Finance noted that the 10-year Treasury yield, which had been just under 4% at the end of February, topped 4.7% earlier in the week, while the 30-year yield reached its highest level since June 2007 before easing following the buyback announcement.
Higher rates also increase the cost of servicing the national debt as borrowing remains elevated. Yahoo Finance said the national debt crossed $40 trillion and that the annual budget deficit is expected to top $2 trillion, with interest on the federal debt costing more than $1.2 trillion in fiscal year 2025 and already nearly that amount with more than a month remaining in fiscal year 2026.