The US Treasury has doubled the size of its buyback operations for longer-dated bonds after the 30-year yield hit its highest level since 2007. Secretary Scott Bessent framed the expansion, worth an estimated $14 billion in added purchases, as a liquidity fix rather than an attempt to push yields lower.
The US Treasury is putting close to $1 trillion in firepower behind a bond market that Secretary Scott Bessent says has been running a fever. Bessent announced a doubling of the government's buyback program for longer-dated securities, a move designed to cool yields that had climbed to levels not seen since 2007.
What triggered the expansion
Buyback operations now rise from $2 billion to at least $4 billion at the maximum, covering both the 10- to 20-year and 20- to 30-year sectors. The changes take effect September 9 and run through November 4, 2026, adding an estimated $14 billion in additional buybacks to the roughly $69 billion in Treasury purchases already planned this quarter.
Thin summer trading conditions combined with a wave of corporate bond issuance, much of it tied to AI infrastructure buildouts, to create unusual selling pressure at the long end of the yield curve. Companies issuing bonds often hedge by selling Treasuries, which pushes government bond prices down and yields up, and enough of that activity landed in a low-liquidity window to trigger disorderly price action.
Treasury's war chest
The Treasury General Account has been built up to approximately $950 billion, and Bessent indicated there could be further increases in these operations depending on how market conditions evolve. The initial market reaction was swift: the 30-year yield dropped by 9 basis points immediately after the announcement, though yields then retraced much of that decline.
A liquidity fix, not yield suppression
Bessent was careful to frame the expansion as a liquidity enhancement rather than a direct attempt to suppress yields, arguing the program improves market functioning in off-the-run Treasuries rather than manipulating prices. He also affirmed the continuation of the regular debt auction schedule, signaling the buyback expansion isn't a substitute for normal issuance patterns.
The buyback program addresses the symptom, but the corporate bond issuance boom tied to data centers and AI compute is the structural source of the selling pressure it's designed to absorb.
Source: Crypto Briefing
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