US Treasury Doubles Long-Bond Buybacks to Calm Surging Yields

The US Treasury has announced it will double the size of its buyback operations for long-dated government debt, a move aimed at easing pressure in a market that recently saw the 30-year yield touch its highest level in nearly two decades.

The department said the increase, from $2 billion to at least $4 billion per operation, will apply to securities in the 10-to-20-year and 20-to-30-year sectors. The larger buybacks will be in effect from September 9 through November 4.

The announcement came a day after the 30-year Treasury yield spiked to 5.34%, its highest since 2007, before settling lower. The surge was driven by concerns over a potential escalation in the US-Israel conflict with Iran and growing unease about the country's fiscal trajectory as total public debt approaches $40 trillion.

The Treasury described the move as a way to provide greater liquidity support in sectors where there is consistent, strong participation from market participants. It noted that it routinely receives a significant volume of high-quality offers in these longer-dated buyback operations.

Market analysts viewed the action as a signal that the Treasury is sensitive to the risks posed by sustained high yields, which can raise borrowing costs for both the government and the private sector, keep mortgage rates elevated, and potentially destabilize broader financial markets.

This is the second time this month that Treasury Secretary Scott Bessent has intervened in markets. Earlier in August, he joined Japan in a currency intervention aimed at stemming the yen's slide to 40-year lows against the dollar.

Some analysts questioned whether the increased buyback size would have a lasting impact, noting that the additional $2 billion per operation is modest relative to the overall size of the Treasury market. The total market for unmatured Treasury debt stood at $32.2 trillion as of Monday, with about $5.5 trillion in outstanding 20-year and 30-year bonds.

The Treasury has been conducting scheduled buybacks of older securities for the past two years to support liquidity in off-the-run issues. The next scheduled buyback for 20- and 30-year bonds is set for September 24, with a 10-to-20-year operation planned for September 10. An updated tentative schedule will be published later.

In its quarterly refunding announcement earlier this month, the Treasury said it would repurchase up to $69 billion of Treasuries across all maturities between August 6 and November 5. With the increased sizes, the maximum repurchases in that window now stand at $83 billion.