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Treasury to double long-dated bond purchases as yields rebound
The Treasury plans to lift regular 10- to 30-year purchases from about $2.0bn to at least $4.0bn starting 9 September, after an initial rally in 10- and 30-year Treasuries faded.
US Treasury secretary Scott Bessent is facing renewed skepticism from bond investors as Washington tries to curb rising borrowing costs in the roughly $32tn Treasury market, without fully addressing the fiscal pressures pushing yields higher, according to a report by the Financial Times.
The Treasury announced plans on Wednesday to at least double its purchases of longer-dated government bonds starting next month, a move that initially triggered a sharp rally in 10- and 30-year Treasuries. The gains proved short-lived as yields reversed higher even after Bessent appeared on CNBC a day later to outline measures available to the administration.
The episode highlights the challenge for Bessent as investors seek evidence that Washington can bring down deficits, stabilize inflation, and manage a rapidly expanding debt load. It also reflects the stance of so-called bond vigilantes, investors demanding higher compensation for holding US government debt amid concerns over fiscal deterioration, persistent inflation, and heavy technology company borrowing tied to artificial intelligence infrastructure.
From 9 September, the Treasury plans to increase regular purchases of Treasuries maturing between 10 and 30 years from around $2.0bn to at least $4.0bn. The Treasury said the program was originally intended to improve liquidity and support trading in older securities, while Bessent has argued current Treasury yields do not reflect underlying economic fundamentals and pointed to factors including the Iran conflict and poor liquidity in the 30-year market.