The Trump administration, through Treasury Secretary Scott Bessent, has surprised markets by announcing it will at least double buybacks of long-dated Treasuries (10- to 30-year maturities). This move, made on Wednesday, August 19, 2026, is reminiscent of the Federal Reserve's "Operation Twist" strategy from 2011, which aimed to lower bond yields. The action comes as long-term Treasury yields have reached their highest levels since 2007 due to a bond-market selloff following the US war on Iran, increasing government borrowing costs and consumer interest bills ahead of the November Congressional elections.
Bessent, who views 10-year yields as a success metric, increased the maximum buyback size from $2 billion to at least $4 billion per operation. This immediately pulled down 30-year yields by as much as 10 basis points to 5.18% and 10-year yields by 5 basis points to 4.66%, though these declines pared slightly. Analysts like George Saravelos of Deutsche Bank described the move as a "soft form of financial repression" and echoed the "Operation Twist" comparison, highlighting that it effectively manipulates the yield curve by replacing longer-term debt with shorter maturities.
While the Treasury did not specify how it would fund these purchases, analysts anticipate it will involve issuing more short-term bills. Barclays strategists estimate the increased buybacks amount to approximately $16 billion quarterly, or $64 billion annually, which is about 15% of the current annual supply of 20- and 30-year bonds. However, economists like Krishna Guha and Marco Casiraghi of Evercore cautioned that this is a "very small-scale Operation Twist" and could backfire if its limited scope fails to have a sustained impact on the underlying economic fundamentals.
