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US Treasury to double buybacks of long-dated bonds

Created at 19 Aug · 1:46 PM6 sources↑ Market-relevant6 events
IN SHORT

The U.S. Treasury will double bond buyback operations to at least $4 billion per operation, effective September 9 through November 4, impacting 10-30 year sectors. The move aims to ease pressure on the bond market, where yields had risen sharply.

Key Numbers

$4 billionnew minimum size for buyback operations
$2 billionprevious size of buyback operations
5.205%30-year bond yield
Sept. 9 - Nov. 4effective period for buybacks

Who's Involved

U.S. Treasury Department
announced doubling of bond buyback operations
Gennadiy Goldberg
head of U.S. rates strategy at TD Securities
TD Securities
commented on Treasury's recognition of bond market pressures
US Treasury to double buybacks of long-dated bonds

↳ Why This Matters

The Treasury's move aims to stabilize the long end of the bond market, where rising yields can increase borrowing costs for consumers and businesses. This action signals the government's intent to manage market pressures amid inflation concerns.

Key facts

  • The U.S. Treasury Department is doubling the size of its liquidity support buyback operations for longer-dated nominal coupon securities.
  • The buyback size will increase from $2 billion to at least $4 billion per operation.
  • These operations will cover the 10-year to 20-year and 20-year to 30-year sectors.
  • The measure will be in effect from September 9 through November 4.
  • U.S. 30-year Treasury yields fell sharply from near 19-year highs following the announcement.

    • The U.S. Treasury Department announced it will double the size of its liquidity support buyback operations for longer-dated nominal coupon securities, increasing the operation size from $2 billion to at least $4 billion. This measure, effective from September 9 through November 4, will apply to the 10-year to 20-year and 20-year to 30-year sectors. The move aims to alleviate pressure on the bond market, which had seen yields climb to near 19-year highs. Thirty-year U.S. bond yields dropped by nearly 10 basis points to around 5.205% following the announcement. Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, stated that markets welcomed the signal that Washington will act if necessary, but suggested the Treasury could do more, calling the measure "the first of many possible actions." Investors are also scrutinizing the Federal Reserve's policy meeting minutes for signs of openness to a rate hike.

    Frequently asked questions

    The U.S. Treasury Department is doubling the size of its liquidity support buyback operations for longer-dated nominal coupon securities.

    The move is intended to ease pressure on the long end of the bond market, where yields had risen sharply, and to manage government borrowing costs.

    The operations will cover the 10-year to 20-year and 20-year to 30-year sectors.

    The increased buybacks will be effective from September 9 through November 4.

    What Happens Next

    01Buyback operations will increase to at least $4 billion per operation starting September 9.
    02The measures will remain in effect through November 4.
    03Investors will scrutinize the Federal Reserve's policy meeting minutes.
    CME Headlines
    • 10-Year note yields retreat from year-to-date highs ahead of FOMC minutes.
      18 Aug · 8:37 PM
    • 10-Year note yields retreat from year-to-date highs ahead of FOMC minutes.
      18 Aug · 8:37 PM
    • Australian Dollar futures pull back from 2.5-month high as commodities decline.
      18 Aug · 7:49 PM

    How It Developed

    The U.S. Treasury will double bond buyback operations to at least $4 billion per operation.
    The U.S. Treasury will double buyback operations to $4 billion, effective Sept. 9-Nov. 4, impacting 10-30 year sectors.
    US 30-year Treasury yields dropped from 19-year highs after the Treasury announced doubled buyback operations.
    The Treasury Department is doubling its buyback operations for longer-dated U.S. debt to at least $4 billion per operation.
    US Treasury doubles debt buyback to steady bond market amid inflation fears.

    Sources

    T1
    Instant View: US Treasury will double some bond buy backsReuters
    T1
    US treasury doubles debt buyback to steady bond market amid inflation fearsThe Guardian
    T1
    Treasury announces move to buy back more US debt after days of bond market painPolitico
    T2
    Bessent Boosts Debt Buybacks After Climb in Treasury Yieldsbloomberg.com

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