U.S. treasury escalates bond buybacks to stem surging yields

U.S. Treasury Secretary Scott Bessent said on Thursday that Washington could enlarge its purchases of long-dated Treasury bonds, according to Reuters, as officials try to calm a bond market where yields have neared levels last seen two decades ago. The Treasury had unexpectedly announced on Wednesday that it would roughly double buybacks of longer-dated securities across the next quarter, with each operation at no less than $4 billion. Speaking to CNBC, Bessent indicated that the amount could exceed that $4 billion level.

The 30-year Treasury yield traded near 5.24 per cent on Thursday, about 10 basis points below Tuesday's high, which was the loftiest level since June 2007. The initial reaction to the plan produced the sharpest one-day decline in long-dated yields since last October, yet about half of those gains had been erased by Thursday as investors remained skeptical.

Bessent said the buybacks are meant to support trading in thinly traded summer markets, which are also absorbing a wave of company bond sales to fund artificial intelligence projects. Total US public debt has topped $40 trillion, while interest costs are approaching $1.2 trillion this fiscal year with two months still to run. He expects planned spending reductions, along with stronger growth, to offset near-term fiscal pressure.