US Treasury doubles buyback sizes while keeping debt auction schedule unchanged

The US Treasury is doubling the size of its liquidity support buybacks for longer-dated debt while keeping its regular auction schedule completely untouched. The announcement, made on August 19, lays out a plan to increase maximum buyback sizes from $2 billion to at least $4 billion per operation for nominal coupon securities with maturities between 10 and 30 years. The expanded operations kick in on September 9 and run through November 4. Steady auctions, bigger buybacks The Treasury’s most recent quarterly refunding, dated August 5, confirmed that auction sizes remain unchanged. That means $58 billion in 3-year notes, $42 billion in 10-year notes, and $25 billion in 30-year bonds, totaling $125 billion. Of that amount, roughly $96.3 billion goes toward refunding maturing securities. The remaining $28.7 billion represents net new borrowing. The buybacks specifically target “off-the-run” securities, which is bond-market speak for older issues that don’t trade as frequently as the newest ones. These securities can become illiquid over time, sitting on dealer balance sheets and gumming up the plumbing of the Treasury market. Why the Treasury is stepping in now Longer-dated Treasuries...