US Treasury to Announce Bond Buyback of Up to $10 Billion

The U.S. Department of the Treasury will announce a new buyback of long-term Treasury bonds on September 10, with expectations that the amount will exceed $4 billion. Scott Bessent, who is responsible for the operation, previously doubled the planned buyback volume from $2 billion to $4 billion and believes that the new operation could be larger. Morgan Stanley estimates the upper limit of the buyback at $10 billion, while economist Lou Crandall considers $5-6 billion to be realistic. The need for the buyback arose after the yield on 30-year bonds rose to 5.337%, the highest level since 2007. Following the announcement of the buyback, the yield fell to 5.19% but began to rise again. As of the latest trading, the yield on 30-year bonds was 5.235%, while that of 10-year bonds was 4.704%. Bessent noted that the yield level is not the only reason for the buyback; he aims for bond prices to align with economic indicators. The U.S. national debt has surpassed $40 trillion for the first time. The Treasury's change in approach has already impacted financial markets, notably pushing the price of gold up to $4,525 per ounce. Regular bond buybacks could support risk assets like Bitcoin by improving liquidity.