US Treasury Raises Bond Buyback to $6 Billion per Transaction
US Treasury bond yields continued to rise to new levels following the Treasury Department’s announcement that it would increase the size of its long-term bond buyback operations to $6 billion per transaction, a move aimed at supporting the bond market and calming rising volatility.
The step comes as US Treasury Secretary Scott Bessent seeks to mitigate pressures facing the bond market, amid surging yields on long-term government debt to historic levels and investor concerns over the size of US debt and the trajectory of government borrowing.
Earlier, the Treasury Department had announced an increase in long-term bond buyback operations from $2 billion to at least $4 billion per transaction, with operations scheduled to continue from September through November. The increase to $6 billion per transaction reflects a greater willingness to use the “buyback program” to support liquidity in the bond market.
Buyback operations, known as “buybacks,” involve the Treasury Department purchasing existing government bonds from the market, which can help improve liquidity and manage the debt structure, but does not in itself reduce the total government debt.
Despite the announcement of larger buyback sizes, bond yields continued to rise, indicating that the step has not yet been sufficient to reverse pressures in the debt market.
Movements in long-term bond yields are a key indicator of borrowing costs for the US government, and they also affect financing costs for corporations and households, as well as equity and other asset valuations.
The announcement also impacted other financial markets. The dollar pared its losses against the Japanese yen after the announcement, but remained down about 0.18 percent at 153.76 yen.
Conversely, the dollar rose against the Swiss franc by about 0.11 percent to 0.8102 francs, while the euro pared its gains against the US currency, posting a marginal increase of about 0.01 percent at $1.1623.
US stock indices also continued to post slight losses following the announcement, as investors monitor the impact of rising bond yields on financing costs and equity valuations.
