Treasury's $6B bond buyback fails to curb rising yields — SkimNews
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- Treasury Department tripled its quarterly long-term bond buyback operations to $6 billion per auction, starting with one set for Thursday, aiming to improve market liquidity.
- Bond market sent the 10-year Treasury yield spiking to 4.85% — the highest since October 2023 — immediately after the announcement, contradicting the expected downward pressure on rates.
- Scott Bessent's strategy drew skepticism from traders and analysts who viewed the move as insufficient given the $32 trillion in publicly traded Treasury securities.
- Ira Jersey of Bloomberg Intelligence stated that to truly influence the market, Treasury would need to 'shock and awe' with buybacks of $10 billion or more per operation.
- Guneet Dhingra at BNP Paribas called the buybacks a 'Band-Aid' solution that doesn't address the underlying structural deficit driving high yields.
- Steven Zeng of Deutsche Bank remarked that Treasury had 'created this monster that it now has to keep feeding,' implying the policy may require ever-larger interventions.
Why it matters: The $6 billion buyback was too small to move a $32 trillion market, and the resulting yield spike shows investors see fiscal fundamentals — not tactical purchases — as the real driver of rates. This undermines Treasury’s credibility in managing borrowing costs just as debt servicing expenses climb.
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