US Treasury Department Increases Long-Term Bond Buybacks
Although the ministry increased the long-term bond buyback amount to $6 billion, this move fell short of investor expectations and caused disappointment in the market.
The US Treasury Department has tripled the size of its buyback operations for long-term government bonds to $6 billion in an effort to limit the rise in borrowing costs.
Expansion of the Buyback Operation
The US Treasury Department announced that it has tripled the initial size of its upcoming buyback operation for long-term government bonds. The ministry stated that it will purchase up to $6 billion of existing bonds maturing in the 10-to-20-year segment within this scope.
Market Expectations and Disappointment
This move was met with disappointment by investors who had expected an even larger increase and failed to create the anticipated impact in the market. Deutsche Bank strategist Steven Zeng noted that even though the amount was tripled, the shock effect desired by investors was not achieved.
Rise in Bond Yields
Following the announcement, US Treasury bonds continued their decline, while the yield on 10-year bonds rose by as much as 6 basis points at one point. This benchmark rate reached 4.85 percent, recording its highest level since 2023.
Future Outlook
Treasury Secretary Scott Bessent’s earlier signals that the purchase amount could increase had driven market expectations higher. However, the ministry did not signal any further increases for buyback operations beyond Thursday for now.