Treasury Secretary Scott Bessent announced on Wednesday an expansion of his department’s debt buyback program, but this unusual move was met with disappointment. The initial expanded buyback amount announced proved insufficient to halt market declines.
The Treasury plans to purchase up to $6 billion in long-term bonds—triple the amount planned last month—but this fell short of moving the $32 trillion U.S. government bond market. Investors had likely expected a larger figure, around $10 billion.
Following the announcement, U.S. Treasury prices continued their downward trend, with 10-year Treasury yields surging as high as 4.85%.
Deutsche Bank strategists noted that the final $6 billion buyback plan did not deliver the “shock” effect investors had hoped for.
“With the current situation, the Treasury is like showing up at a tank battle with a toy gun,” said Elias Haddad of Brown Brothers Harriman.
After the initial announcement on August 19 to expand the buyback program, yields briefly dipped but quickly rebounded. Following the 30-year Treasury yield reaching its highest level since 2007, Bessent shifted course and adjusted the program. On Tuesday, speaking at an event in Texas, he said these measures stemmed from concerns that “the U.S. would be unable to repay its debt.” “It’s absurd, yet it has become mainstream sentiment.”
Bessent previously emphasized separately that the buybacks were intended to boost liquidity. Last week, he stated that the program would allow banks and other institutions to sell securities that are difficult to trade, thereby increasing their participation in new bond auctions.
