Treasury Secretary Scott Bessent's recent interventions aimed at stabilizing the bond market have not yet succeeded, as reflected by the 10-year Treasury note yield climbing back to 4.69% on Thursday. This occurred despite his surprise announcement on Wednesday to double the bond buyback program from $2 billion to $4 billion per operation starting next month. The buybacks are designed to reduce the supply of longer-term bonds, thus increasing their prices and lowering yields. Bessent even suggested on CNBC that the program could be expanded further.
Analysts and market experts have expressed skepticism regarding the effectiveness of these measures. Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, noted that the market remains unconvinced that Treasury can effectively address the situation. Similarly, UBS Wealth Management strategists highlighted that such interventions typically offer only temporary relief and do not sustainably lower borrowing costs if underlying fiscal, inflation, or supply dynamics remain unfavorable. This skepticism is compounded by the sheer size of the Treasury market; Macquarie analysts estimate the U.S. government needs to issue nearly $550 billion in bonds this quarter, dwarfing the proposed buyback amounts.
The broader context for investor concern includes the burgeoning national debt, which recently surpassed $40 trillion, just months after exceeding $39 trillion in April. The Congressional Budget Office also projected an annual deficit exceeding $2 trillion this year, a figure usually seen only during recessions. Critics, like Krishna Guha of Evercore ISI, described Bessent's plan as a "weak form of Operation Twist" and warned it could backfire if perceived as a signal of deeper concerns about the government's ability to fund itself at acceptable costs. Thomas Simons, chief U.S. economist at Jefferies, also criticized the irregular timing of the announcement, stating it undermined Treasury's long-held strategy of "regular and predictable" policy changes.
