US Treasury raises its long-dated bond buyback to 6 billion dollars
The US Treasury raised the ceiling for a long-dated government-debt buyback to 6 billion dollars and set a 4 billion dollar floor for future operations. The 10-year yield rose to 4.85 per cent after the announcement. Although the operation is three times the usual size, its scale sat at the lower end of the market's expectation of 6 billion dollars to 10 billion dollars.
Economics & Markets··Morning
The buyback triples in size
The US Treasury said it would buy back as much as 6 billion dollars of long-dated government debt. That is three times the usual size of the operation. Secretary Scott Bessent had signalled an increase on 19 August without naming an amount. The Treasury also said future long-dated buybacks would be at least 4 billion dollars. The announced operation will take place on Thursday. CNBC reported the announcement independently, noting that it triples the normal buyback operation and follows an earlier announcement from Treasury Secretary Scott Bessent.[1], [2]
The 10-year yield reaches 4.85 per cent
After the announcement, the 10-year US Treasury yield reached 4.85 per cent. No higher level had been recorded since 2023. Some older securities initially cheapened, adding no more than 5 basis points to their yields, and later recovered part of that move. A close above 4.82 per cent for the 10-year yield would have been the highest since October 2023.[1]
The market expected a larger floor
Market expectations ran from 6 billion dollars to 10 billion dollars, according to Robert Tipp at PGIM Credit. The announced 4 billion dollar floor for future operations fell below that range, and Tipp attributed the concentration of selling in long-dated securities to that gap. Thursday's buyback is scheduled for a 20-minute window. During it, the Treasury will repurchase long-dated government debt from the market.[1]
