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U.S. Treasury to buy back $6bn in government debt after bond sell-off
The 30-year Treasury yield was about 5.2%, the highest level since the 2008 financial crisis, and the buyback is meant to reduce supply and ease upward pressure on yields.
The U.S. Treasury will buy back $6bn worth of government bonds to help alleviate a sell-off in the U.S. bond market, Treasury Secretary Scott Bessent announced, according to The Guardian. The effort is intended to stabilize the market by reducing the number of bonds available.
Despite the announcement, the outlet reported that Treasury yields continued to rise, with the 30-year Treasury yield reaching about 5.2%, the highest level since the 2008 financial crisis. Bessent’s move on Aug. 19 was described as at least doubling the Treasury’s typical buyback operation.
The Guardian said investors have been spooked by rising inflation and uncertainty tied to the war in Iran, contributing to the shift away from Treasuries. The piece noted that for the first time in U.S. history, government debt reached $40tn in August.
Higher yields can flow through to borrowing costs, potentially raising rates on loans including mortgages, student debt, and car loans where pricing is tied to the bond market, the report added. It also said inflation is influenced by higher energy prices, with annualized inflation hitting a three-year high in May before falling to 3.4% in July, and oil prices pushing above $100 per barrel as Middle East conflict escalates.