Treasury to buy back more government bonds than previously announced

The U.S. Treasury Department announced plans on Wednesday to purchase up to $6 billion in long-term government bonds in an effort to curb rising yields and ease borrowing costs. This move was announced as part of the government's strategy to counteract the increase in borrowing costs for consumers and businesses, which can also negatively impact stock prices.

The Treasury Department has vowed to double its bond buybacks to $4 billion to support prices of bonds, which have seen their yields increase. These higher yields are attributed to the rising national debt, which surpassed $40 trillion in August, doubling in less than a decade.

Mike O' Rourke, a chief market strategist at JonesTrading, criticized the government's approach, stating that it only tinkers at the periphery of the market rather than addressing the root issue of the national debt. The 10-year Treasury rate, which impacts mortgage rates, rose to 4.85% from 4.80% on Tuesday, reaching its highest point since October 2023.

While some Wall Street analysts doubt the effectiveness of the government's bond buybacks in containing yields and lowering borrowing costs, others remain cautious about the future of the market interventions. Guy LeBas, chief fixed-income strategist at Janney Montgomery, expressed skepticism about the impact of the government's actions, while Lou Crandall, chief economist at Wrightson ICAP, noted that the size of the remaining six bond-buyback operations through November will be $4 billion or more.