Bessent deploys debt buybacks in sign of concern over yield rise
The new plan by the US Treasury Secretary drives the US dollar to the weakest in three months
US Treasury Secretary Scott Bessent has deployed larger-than-expected debt buybacks to address concerns over rising yields and long-term borrowing costs. The initiative, announced on Aug 19, involves doubling the size of liquidity support buyback operations for 10-year to 30-year securities. This move sent the US dollar to its weakest level in three months and pushed yields on 30-year bonds down by up to 10 basis points to 5.18 percent, moving away from its highest level since 2007.
The measure aims to keep long Treasury rates contained and alleviate pressure on US borrowing costs, which has become a potential hurdle for economic growth and upcoming US midterm elections. The Treasury plans to initiate the ramped-up buybacks on Sep 9, with an initial allocation of up to US$38 billion for older securities. The move signals that the administration is closely monitoring market conditions and is concerned about long-end yields.
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