US Treasury buyback falls short of Wall Street expectations, pushing yields to highest since November 2023

The US Treasury announced it would repurchase up to $6 billion in 10- to 20-year securities, a figure that landed with a thud on Wall Street trading desks expecting something closer to $8-$10 billion. The 10-year Treasury yield promptly climbed roughly 5 basis points to around 4.84-4.85%, levels not seen since November 2023. Treasury Secretary Scott Bessent’s expanded buyback program, introduced on August 19, was supposed to be the confidence-building measure that calmed a jittery bond market. Instead, its first major test revealed a gap between what the government is willing to do and what markets think it needs to do. A band-aid on a bullet hole The buyback program raised the minimum operation size from $2 billion to at least $4 billion through early November. So the $6 billion figure technically exceeded the new floor. But meeting the minimum and meeting the moment are different things entirely. Analysts at Nomura, ING, and Wells Fargo were largely unimpressed. Their collective assessment: daily Treasury trading volumes exceed $1 trillion, making a $6 billion repurchase operation look like a rounding error in the context of the broader market. One analyst description that circul...