US Treasury doubles buyback cap to calm long-dated debt selloff

The US Treasury just did something it rarely does: intervene in the bond market on short notice. On August 19, Treasury Secretary Scott Bessent announced the department would double its per-operation buyback cap for long-dated securities from $2 billion to $4 billion, effective September 9. The move came after 30-year Treasury yields surged to 5.33% on August 18, a level not seen since 2007. What the Treasury is actually doing Buyback operations are essentially the Treasury repurchasing its own older, less liquid bonds from the market. The new $4 billion per-operation cap represents a meaningful escalation. The buybacks will target securities maturing in 10 to 30 years and will run from September 9 through November 4. The prior quarterly buyback schedule had outlined a maximum of $38 billion in total purchases for the quarter. Yields on long-dated Treasuries eased modestly after the announcement broke. Why long-dated bonds were getting crushed The selloff in long-dated Treasuries didn’t happen in a vacuum. Persistent inflation concerns sit near the top of the list. Expanding federal deficits added fuel. The US government’s borrowing needs have ballooned, with $739 billion in privat...