US Treasury Secretary Bessent doubles US long-bond buybacks in the face of surging yields

On August 19, the U.S. Treasury announced an increase in long-duration bond buybacks, aiming to stabilize rising yields that had caused concern among global investors. The move, which doubles buyback sizes for long-duration debt to at least $4 billion per operation, was implemented from September 9 through November 4. The announcement came in response to a significant bond selloff, pushing the 30-year Treasury yield to its highest level since 2007, mainly due to fears of a U.S.-Israeli war with Iran and a deteriorating U.S. fiscal picture.

Higher yields increase borrowing costs, affecting households, companies, financial markets, and the federal budget. Treasury Secretary Scott Bessent emphasized that the action will not change deficits, but it will provide greater liquidity support in longer-dated nominal sectors. The decision reflects the sensitivity to debt market pressures that could potentially worsen borrowing costs, keep mortgage rates high, and risk broader financial market dislocations.

Market analysts noted that the Treasury may issue more short-term debt instead of longer-term bonds.