Treasury to Maintain Scheduled Debt Auctions as Buyback Limits Double

Treasury Secretary Scott Bessent told reporters on Monday that the agency will continue its regular program of Treasury auctions despite a recent announcement that the maximum authority for buying back longer-dated securities has been raised. The change, effective Sept. 9, lifts the per-operation ceiling from $2 billion to a floor of $4 billion, allowing the Treasury to adjust buyback size according to market conditions.

Bessent said the next auctions of 10-year notes and 20- and 30-year bonds are not slated until mid-September, the earliest point at which the new buyback structure could affect the market. He added that the Treasury has not yet executed any purchases under the expanded authority.

The Treasury explained that the larger buyback operations are intended to provide additional liquidity in the longer-dated nominal sector, where it regularly receives high-quality offers. The increase is expected to remain in place through Nov. 4, after which the department will review future buyback sizes.

Yields on 10-year Treasury notes and on 20- and 30-year bonds fell briefly after the announcement but largely recovered by week’s end. Bessent noted that the higher buyback capacity is aimed at supporting liquidity in the thinly traded 30-year market, which faces competition from corporate bond issuance amid rising interest rates.

The Treasury did not specify the funding source for the buybacks. Analysts have suggested that the Treasury General Account at the Federal Reserve could be used, which would reduce the need for new short-term issuance but would draw down the government's cash reserves, currently around $940 billion.