Treasury Secretary Bessent expands bond buyback plan as yields rise
Despite Treasury Secretary Scott Bessent's announcement to double a bond repurchase program, 10-year Treasury yields climbed to 4.69%, reflecting ongoing market concerns over debt levels and inflation.
Washington – Treasury Secretary Scott Bessent announced on Thursday that the Treasury will double the size of its bond buyback program to $4 billion per operation starting next month, aiming to reduce the supply of 10-year to 30-year Treasury securities and support their prices. Nevertheless, the yield on the benchmark 10-year note rose to 4.69%, near Wednesday’s level, while the 30-year yield edged up to 5.23% after reaching a 19-year high earlier in the week.
Bessent told CNBC that the repurchase program could be expanded beyond $4 billion, saying, "We have a big toolkit so we’ll see. We believe that the yields don’t reflect the underlying fundamentals." He also indicated that the administration plans to announce a new initiative to curb the federal budget deficit, citing temporary factors such as tariff refunds.
Analysts noted that the Treasury’s actions are unlikely to offset broader market forces. Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, said the market remains skeptical about Treasury’s ability to backstop the measures, emphasizing that deficit reduction depends largely on Congress. Meanwhile, Mark Cabana of Bank of America Securities highlighted uncertainty over the Federal Reserve’s inflation-fighting stance as a key driver of higher borrowing costs.
The Federal Reserve, led by Chair Kevin Warsh, has not signaled a clear policy shift, and investors are awaiting his remarks at an upcoming conference in Jackson Hole. Some strategists observed that the recent Fed meeting produced an unusual pattern, with short-term yields falling while longer-term yields rose, suggesting markets may expect the Fed to keep its policy rate lower.
The Treasury’s buyback program, though sizable in absolute terms, represents a small fraction of the market. Macquarie estimates that the government will need to issue roughly $550 billion in new bonds this quarter, and past interventions in other countries have provided only temporary relief without permanently lowering borrowing costs, according to UBS Wealth Management.