Treasury triples buyback of longer-term debt to $6 billion
Washington Examiner · RC · trust 57/100
The Treasury Department announced it will buy back $6 billion in longer-term debt in an effort to stabilize bond markets, which have been turbulent as the national debt recently surpassed $40 trillion .
The Treasury announced the buyback operation on Wednesday, with officials saying it will include the purchase of 10-year and 20-year Treasury bonds. Treasury yields have recently risen to levels that have raised concern among investors and budget experts, in part prompting the action by the department led by Treasury Secretary Scott Bessent.
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But the announcement caused bond yields to rise, briefly sending the benchmark 10-year yield to its highest level since 2023. The buyback announcement was anticipated, and some on Wall Street had expected the Treasury to announce a bigger operation than was revealed on Wednesday.
That move is designed to lower longer-term yields.
Before noon Wednesday, the yield on the 10-year rose more than 0.04% to 4.84%, while the 20-year was up to 5.3%. The longer-run 30-year Treasury yield rose to just under 5.3% after the news broke.
The increased buybacks come after the Treasury announced last month that it would at least double the size of its debt buybacks from $2 billion to $4 billion. The bond markets shrugged off that intervention as well.
Higher yields on longer-term bonds can signal unease about the longer-term financial prospects of the U.S. government, Ryan Young, a senior economist at the Competitive Enterprise Institute, told the Washington Examiner after the U.S. initially doubled buybacks to $4 billion.
“If investors are looking at buying a 10-year bond or a 30-year bond, they’re thinking, ‘Am I going to get my money back in 10 years or 30 years?’” Young said. “That’s not as risk-free as it used to be, which is why the government is having to offer higher and higher premiums to entice people to take on that now riskier debt.”
Stocks were also in the red on Wednesday following the announcement, with the Dow Jones Industrial Average down more than 400 points. Meanwhile, oil prices, which influence gas prices and headline inflation, crossed $100 per barrel on Wednesday.
There have been some critics of Bessent’s buyback plans.
Stanley Druckenmiller, the head of Duquesne Family Office, who has been characterized as a mentor of Bessent in the past, pushed back on the buybacks in an op-ed , written using artificial intelligence and published in the Wall Street Journal .
“Every basis point of artificial yield suppression is a subsidy to procrastination,” the op-ed reads. “Suppressed long rates sugarcoat the interest-cost projections, shrink the apparent urgency, and let incumbents assure voters the debt is someone else’s problem.”
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