Treasury Secretary Scott Bessent announced that the Treasury Department will at least double its debt buyback operations, increasing the maximum size from $2 billion to at least $4 billion. This move, which will begin on September 9 and last until November 4, specifically targets the 10- to 20-year and 20- to 30-year portions of the market, where a "buyers' strike" has been observed since late June. The goal is to provide greater liquidity support in these longer-dated nominal sectors, where the Treasury notes consistent strong sponsorship from market participants.
Following the announcement, bond yields cratered, and stock market futures rose sharply. The benchmark 10-year note closed down 5.7 basis points to 4.647%, and the 30-year "long" bond tumbled 9 basis points to 5.196%. President Donald Trump, when asked if Americans should be worried about the bond market, responded, "No, I don't think so." The Treasury stated that this increase in buyback operations reflects its desire to be a larger buyer of older, longer-duration debt, thereby providing liquidity.
While the move aims to stabilize the bond market, some economists expressed skepticism about its long-term impact. Krishna Guha of Evercore ISI suggested the operation could encourage buyers and deter short-selling, but also noted it "changes almost nothing in terms of the fundamentals," particularly the need to finance significant government deficits and hyperscaler debt. Joe Brusuelas, chief economist at RSM, argued that Bessent's actions are politically motivated and could complicate the Federal Reserve's efforts to control inflation by artificially suppressing yields. Mohamed El-Erian described the planned purchases as "small in both absolute terms and relative to net issuance," viewing them more as a "broader deployment of 'yield curve control'" rather than a fundamental solution.
The announcement is seen as a signal that the Treasury is attentive to liquidity issues at the longer end of the market and is willing to be a more active participant. However, Peter Boockvar, chief investment officer at One Point BFG Wealth Partners, clarified that this is "NOT a debt paydown, it is just a rearrangement of the maturity schedule of Treasuries." Despite the immediate positive market reaction, including a drop in the 10-year yield to as low as 4.63% from a recent high of 4.74%, economists like Jim Bullard and Mohamed El-Erian cautioned that the effects might be short-lived without addressing fundamental issues such as large fiscal deficits and the overall national debt, which recently reached $40 trillion.
