4.83%. That was where the 10-year Treasury yield stood at 11:35 a.m. in New York on September 9, up about 5 basis points on the day and the highest since 2023, Bloomberg reported. CNBC TV18 later had it at 4.85%, with the 30-year at 5.3%.
The cause was a Treasury announcement that was supposed to push yields the other way, Bloomberg reported.
Triple the size
The Treasury said it will buy back up to $6 billion of outstanding securities maturing in the 10- to 20-year sector. That is three times the $2 billion first communicated to investors, and it is the first operation under an expanded buyback programme that Treasury Secretary Scott Bessent has been pushing since August 19, when the department said it would “at least double” planned purchases without waiting for its regular quarterly announcement. That surprise is what started talk of a more activist Treasury, a break from its old line of being “regular and predictable”.
According to Bloomberg, the Treasury said the maximum size for each of the six other scheduled long-dated nominal buybacks this fiscal quarter will be $4 billion or more. Nothing was offered beyond that. And the $6 billion is a ceiling, not a promise, although the department has bought the full size in all but two of the 52 such operations since the programme returned in 2024.
Why the market shrugged
Dealers had been raising their forecasts after Bessent publicly floated purchases of more than $4 billion. Triple the original figure still read as a letdown. “They tripled the amount, but the market is trading it like a disappointment because it’s not the shock and awe” investors wanted, said Steven Zeng, a strategist at Deutsche Bank. He added: “It’s like Treasury created this monster that it now has to keep feeding.”
BNP Paribas’s head of US rates strategy, Guneet Dhingra, said before the announcement that a maximum of $7 billion would be needed to surprise the market, and that anything smaller could invite more selling, according to Bloomberg.
The deeper problem is scale. Buybacks take older, harder-to-trade bonds off the market so that banks and other institutions can take part more actively in auctions of new debt. They are not the Federal Reserve buying bonds to force borrowing costs down. At $6 billion, the operation is small against the size of the Treasury market and the government’s borrowing needs, and worries about inflation, deficits and debt supply can swamp it.
Bessent has said he cannot change the “equilibrium” price of Treasuries. His aim, he has said, is to slow the moves and stop a damaging narrative from taking hold. In August, when 30-year yields touched their highest since 2007, concerns that the US could not pay its debt became the “dominant narrative”, he said at an event in Texas, calling the idea absurd.
Politics and cash
The squeeze reaches households. US mortgage rates have climbed to their highest in more than a year, which adds pressure on the Trump administration with the November congressional election weeks away. Bessent has called his approach a “Treasury twist”.
CNBC reported, citing two senior Treasury officials, that the department could draw on its Treasury General Account, a cash balance of nearly $950 billion, to fund larger buybacks. No decision has been made on how much. Krishna Guha of Evercore ISI told Bloomberg that Bessent has “absolutely adopted a very activist model” and that the open question is whether such moves hold without a change in fundamentals.
Sources
- US Treasury tripled its bond buyback to $6 billion. So why are yields still rising? – CNBC TV18
- US Treasury triples bond buyback to $6 billion: Why markets saw the move as a disappointment | Stock Market News
