Posted on 08/19/2026 7:41:08 AM PDT by Miami Rebel
The Treasury Department on Wednesday said it will more than double the size of its government debt repurchases, sending yields sharply lower at a time of substantial market stress.
With fixed income markets under pressure and yields surging to levels not seen in nearly 20 years, the announcement targets the sensitive longer-duration part of the Treasury market.
Under the accelerated buyback, Treasury, led by Secretary Scott Bessent, will target the 10- to 20- year and 20- to 30-year portion of the market, which has seen a buyers’ strike since late June. The government will “at least double” the maximum size of its buyback operations, from $2 billion to “at least” $4 billion, according to an announcement from the department.
Yields cratered following the announcement while stock market futures rose sharply.
The benchmark 10-year note fell 6 basis points to 4.647% and the 30-year “long” bond tumbled 9 basis point to 5.196%. A basis point equals 0.01%. Yields and prices move in opposite directions. The change will start Sept. 9 and stay in effect through Nov. 4.
“This increase in buyback operation sizes reflects Treasury’s desire to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants, as evidenced by the significant volume of high-quality offers Treasury routinely receives in longer-dated buyback operations,” the department said in a statement.
At its core, the move means that Treasury will be a larger buyer of older, longer-duration debt, providing liquidity to a part of the market that historically has shown strong demand.
The stepped-up operation “can help crowd in potential buyers tempted by the prior run-up in yields and force some near-term short-covering, while discouraging investors from going max short in the future for fear of being ambushed again,” Krishna Guha, head of global policy and central bank strategy at Evercore ISI, said in a client note.
“But the operation changes almost nothing in terms of the fundamentals in particular the unchanged need to finance the tidal wave of hyperscaler debt in addition to very large government deficits,” he added.
Moreover, the attempt to keep yields in check could end up making the Federal Reserve’s job of getting inflation back to 2% more difficult, said RSM chief economist Joe Brusuelas. Fed Chairman Kevin Warsh has expressed a preference in the open market determining rates, and a move such as the one Treasury announced could artificially suppress yields and make inflation control more difficult.
“Bessent is a political actor. His interest is purely short term and is organized around the upcoming election and not a return to price stability,” Brusuelas wrote.
Economist Mohamed El-Erian wrote on X that the planned purchases are “small in both absolute terms and relative to net issuance” and more about “a broader deployment of ‘yield curve control.’”
In the most recent run-up in yields, market experts have pointed to various factors, including a higher term premium for holding government debt — essentially the extra yield that investors demand — as well as a changing profile of the Treasury buyer base. In addition, they cited increased supply of corporate debt, specifically related to artificial intelligence.
Wednesday’s announcement signals that Treasury is attentive to the liquidity issues at the longer end and is willing to be a more active participant.
“This is NOT a debt paydown, it is just a rearrangement of the maturity schedule of Treasuries,” wrote Peter Boockvar, chief investment officer at One Point BFG Wealth Partners.
Apparently the market likes it - DOW up 295, S&P up 39, after flat futures this morning.
This is nothing new. Governments & corporation have been doing this since I was a child. For reference, I am now 86 years age.
You’ve got a few years on me, sir.
Treasury has intervened innumerable times, but doing so with the backdrop of a $40 trillion and growing debt is unprecedented.
Interest rates are determined by worldwide supply and demand for credit; and differences across countries reflect differences in expected inflation. We, the U.S., have expected inflation of 3.6 percent, better than most, but higher than the long-time target of 2 percent. So, our interest rates are going to be that much higher than they previously have been.
https://tradingeconomics.com/country-list/inflation-expectations
Bessant is selling short term notes (less than 3 years) so he has the money to buy long term bonds (10 to 30 years).
Now we watch as the short term rates go up with this new buying pressure.
Service on the National Debt is now the third largest category of US Federal Government spending, behind #1 Social Security and #2 Medicare.
Bessant is selling short term notes (less than 3 years) so he has the money to buy long term bonds (10 to 30 years).
Now we watch as the short term rates go up with this new buying pressure.
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The government prints money and makes new money out of thin air. for better or for worse.
The Snake is eating its tail. No way around it, they will only delay the inevitable.
You got me by 11 years but I am bent on catching up.
#1) Somehow throttle Congress’ spending
#2) Keep cranking the USA first/Trump economy
#3) Stop paying the leeches, both home grown and Illegal, who are feeding at the US treasury trough
#4) Stop the fraud and arrest, prosecute, imprison & deport, if warranted, all fraudsters.
#5) Tariffs, then more tariffs
I agree totally. Once debt reaches critical level, it becomes unaffordable. We are getting there fast. I visualize a scenario where selling treasury bonds require 8%+ interest in 2027. Actually during Carter-Reagan era, interest rates on treasuries were much higher in the teens. But the total debt was much smaller. Reagan admin during 8 years tripled federal spending. And the magic of compounding interest has now brought us to $40,000,000,000,000 debt.
Have patience, you will get there sooner than you imagine. Time gone by speeds up more with every decade of life.
“But the operation changes almost nothing in terms of the fundamentals in particular the unchanged need to finance the tidal wave of hyperscaler debt in addition to very large government deficits,” he added.
Moreover, the attempt to keep yields in check could end up making the Federal Reserve’s job of getting inflation back to 2% more difficult, said RSM chief economist Joe Brusuelas. Fed Chairman Kevin Warsh has expressed a preference in the open market determining rates, and a move such as the one Treasury announced could artificially suppress yields and make inflation control more difficult.
“Bessent is a political actor”
* And there you have it. The Real cause of gas 📈
* As the yen cover
* And the price in everything stays steep beyond incomes.
* Millstones to the regular folks
*
Stiff arm to the face, by the Federal Bond Debt. ✖️
👍
Unprecedented How do they keep those plates spinning in the air on those poles?
Congress in 2021 raised their spending by $2 trillion in one year just so they have a new base for spending. That caused massive inflation and prices to go up on everything. Congress members though were not affected as the bribes got bigger.
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