US Treasury long-term bond buyback program

The US Treasury has initiated plans to increase long-term bond repurchase operations to manage elevated debt yields and market liquidity. Initially, the Treasury considered using approximately $935 billion from the Treasury General Account (TGA) to fund these buybacks. Treasury Secretary Scott Bessent indicated that these transactions could potentially exceed a new minimum threshold.

Following these considerations, the Treasury officially doubled the volume of its long-term government security buybacks, raising the minimum amount per operation from $2 billion to at least $4 billion. This initiative is described as “liquidity support” intended to manage the transition of federal debt from long-dated instruments to shorter-term ones, thereby mitigating the impact of high interest rates on sectors such as housing and equities.

On September 7, the Treasury announced a specific intervention scheduled to run from September 9 through November 4. While the announcement initially caused bond yields to drop and prices to rise, the effect was short-lived as investors expressed skepticism regarding the government’s ability to control long-term borrowing costs. This intervention occurs as US national debt exceeds $40 trillion.

As the intervention period begins, the Treasury is expected to provide further details on the plan, which primarily targets 10-year and 20-year securities. Secretary Bessent has also suggested these moves are intended to support the Japanese yen and discourage the Bank of Japan—the largest foreign holder of US debt—from selling its holdings. Analysts from Unicredit noted that these initiatives suggest yields may have reached a “politically and economically sensitive threshold,” while Monte Paschi di Siena described the operation as an attempt to “calm rising fever in the bond market.”