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Bessent signals Treasury may expand buybacks to push down long yields
The Treasury is set to start buybacks on Sept. 9, with the initial plan running through Nov. 4, after Wednesday’s move to lift purchases to $4 billion.
Treasury Secretary Scott Bessent said he is prepared to enlarge the government debt buyback program aimed at supporting long term bond prices, a day after the Treasury announced it would at least double purchases this fall. Speaking to CNBC, he indicated the buyback totals could exceed the $4 billion per issue previously disclosed as long term yields rebounded on Thursday.
The Treasury’s Wednesday actions involve increasing buybacks of 10 year, 20 year, and 30 year Treasuries from $2 billion to $4 billion, with the operation beginning Sept. 9 and remaining effective through Nov. 4. Bessent said the effort is intended to provide signals during typically thin August trading, especially for the 30 year note, amid market distortions from heavy corporate issuance.
He also argued that the Treasury wants to show yields do not reflect underlying fundamentals tied to the Iran conflict, adding that the department has a “big toolkit.” However, Evercore ISI’s Krishna Guha said a moderately larger buyback program would be akin to a weak form of “Operation Twist” and could have little lasting impact, potentially backfiring if it is read as concern about funding longer term at acceptable costs.
On Thursday, long term yields reversed early gains, with the 10 year Treasury rising above 4.7%, after trading at roughly 4.64% on Wednesday’s low. The article also points to macro factors pushing yields higher, including a widening fiscal deficit and inflation running above the Federal Reserve’s 2% target.