Key facts
- The U.S. Treasury will maintain its regular debt auction schedule.
- Treasury Secretary Scott Bessent confirmed the continuation of auctions for long-dated bonds.
- The Treasury plans to double the size of its quarterly bond buybacks for 10- to 30-year securities.
- These increased buybacks are scheduled to commence on September 10.
- No bonds have been purchased yet under the expanded buyback program.
U.S. Treasury Secretary Scott Bessent announced on Monday that the department will continue with its scheduled debt auctions, including for long-dated bonds, despite an increase in the size of its buyback program for 10- to 30-year securities. Bessent stated that the Treasury has not yet purchased any bonds under the enlarged buybacks, which are set to begin on September 10 for 10- and 20-year securities.
Bessent's announcement comes after the Treasury surprised bond investors by announcing it would double the size of its quarterly repurchases of longer-dated bonds, a move that briefly helped lower yields on 10-year Treasury notes and 20- and 30-year bonds. These yields had largely retraced their drops by the end of the week and were down modestly on Monday.
The Treasury chief also issued warnings to countries to cut business ties with Iran, threatening secondary sanctions, and indicated a major sanctions announcement related to a bank would occur later in the week. The funding source for the Treasury buybacks remains unspecified, though the Treasury General Account at the Federal Reserve, which held approximately $940 billion as of last Wednesday, is a potential source. Tapping this account would avoid issuing new, shorter-dated Treasuries but would reduce the nation's cash reserves.
Bessent has argued that the recent rise in yields to nearly two-decade highs was unwarranted given the U.S. economy's strength. He also pointed to plans to curtail government spending, which has driven the U.S. national debt to over $40 trillion. The Treasury's increased buybacks are intended to support liquidity in thinly traded areas of the market, particularly during August, while competing with significant corporate issuance.