Jonathan Levin of Bloomberg Opinion appeared on "Bloomberg Real Yield" to discuss Treasury Secretary Scott Bessent's recent announcements. Levin described Bessent's plans to expand efforts to buy back costlier debt and introduce a new fiscal initiative as a "desperate attempt" to combat the highest borrowing costs in years.
Bessent's move, announced on August 20, 2026, involves at least doubling the size of government debt repurchases. This comes as bond yields have been rising, with the 30-year yield previously hitting its highest in about 19 years. The Treasury aims to provide greater liquidity in longer-dated nominal sectors of the market, specifically targeting the 10- to 20-year and 20- to 30-year portions.
The initial announcement led to a temporary drop in yields, with the 30-year bond tumbling 9 basis points to 5.196% and the 10-year note closing down 5.7 basis points to 4.647%. However, these gains were quickly unwound as the market digested the news and considered longer-term structural problems. The buyback operation, set to start September 9 and run through November 4, was initially slated for at least $4 billion, up from $2 billion, with Bessent hinting it could be even larger.
Analysts like Maia Crook of JPMorgan Chase commented that these interventions "belie the underlying structural challenges and do nothing to address them." Joe Brusuelas, RSM's chief economist, suggested that the Treasury's move could complicate the Federal Reserve's efforts to control inflation, as it might artificially suppress yields. Mohamed El-Erian described the planned purchases as "small in both absolute terms and relative to net issuance" and more akin to "yield curve control."
