US government bond yields rise to three-year high after Scott Bessent’s purchase programme announcement

Treasury Secretary Scott Bessent doubled the size of the government’s bond buyback operations. The bond market said “thanks, but no thanks.” The 10-year Treasury yield climbed to roughly 4.85% on September 9, its highest level since October 2023, just as the expanded purchase program was set to begin. The 30-year yield pushed into the 5.2% to 5.3% range. What Bessent announced, and why it didn’t stick On August 19, the Treasury revealed plans to at least double the operational size of its bond buyback program, scaling from $2 billion to at least $4 billion per operation. The expanded initiative targets longer-dated Treasuries and is scheduled to run from September 9 through November 4. The initial market reaction was exactly what the Treasury wanted. The 30-year yield dropped nearly 10 basis points in the immediate aftermath. Bessent described the expansion as part of a “big toolkit” and left the door open to scaling operations beyond $4 billion depending on economic conditions. One widely circulated characterization called the program a “band-aid on a bullet hole.” The math explains why: quarterly Treasury issuance needs run into the hundreds of billions of dollars. A few extra bi...