The U.S. Treasury Department, led by Secretary Scott Bessent, announced an increase in its long-dated debt buyback operations, targeting the 10-year to 20-year and 20-year to 30-year sectors of the market. The maximum size of these operations will at least double, from $2 billion to at least $4 billion, starting September 9 and continuing through November 4. This move aims to provide greater liquidity support in these sectors, which have experienced a "buyers' strike" since late June.
The announcement led to significant market reactions. The benchmark 10-year note saw its yield fall by 5.7 basis points to 4.647%, while the 30-year "long" bond's yield tumbled 9 basis points to 5.196%. Yields and prices move inversely, so bond prices rose. Stock market futures also rose sharply, and cryptocurrencies like Bitcoin and Ether saw gains, with Bitcoin up over 7% and Ether over 18%, as they are seen as risk assets that typically benefit from falling Treasury yields.
Analysts offered mixed reactions. Krishna Guha of Evercore ISI noted the operation could "help crowd in potential buyers" and discourage future short-selling, but stressed it changes little regarding the fundamental need to finance large government deficits and "hyperscaler debt." Joe Brusuelas, RSM's chief economist, criticized the move as politically motivated by Bessent, aiming to suppress yields for short-term election gains rather than promoting price stability, potentially complicating the Federal Reserve's efforts to control inflation. Economist Mohamed El-Erian described the planned purchases as "small in both absolute terms and relative to net issuance," suggesting it's more about "yield curve control."
Concurrently, President Donald Trump declared an "ECONOMIC D-DAY" against Iran, vowing "TREMENDOUS Economic Consequences" for any country providing a "lifeline" to the nation. In social media posts, Trump threatened severe financial penalties on countries that facilitate oil smuggling, currency swap lines, cash transfers, or allow Iranian use of their financial institutions and airports. Treasury Secretary Bessent is expected to announce additional sanctions, as the administration aims to cripple Iran's economy and prevent it from acquiring nuclear weapons.
