US Treasury's $5 billion buyback of 10-year bonds fails to halt their sell-off

• Bessent increased the bond buyback to $6 billion, while the Treasury conducted an operation worth $5.2 billion.
• *However, the market went against the department, and the yield on 10-year bonds approached 5%. *
• Investor and market participant reactions were predominantly skeptical due to the insufficient scale of the buyback.

The US Treasury, led by Scott Bessent, conducted its first increased buyback of long-term government bonds on September 10, amounting to $5.2 billion, but the operation failed to stop the rise in yields, according to the FT.

Following the announcement of the results, the yield on 10-year bonds rose above 4.85% for the first time since 2023, and on September 11, it reached nearly 4.98% — the highest level in almost three years. At the time of writing, the figure stood at 4.93%.
Yield on 10-year US government bonds. Source: TradingView .

Investors believe that the scale of intervention was insufficient for the US government debt market, which is around $32 trillion, while rising oil prices, inflation risks, budget deficits, and expectations of an interest rate hike by the Fed continue to pressure the bonds.

Buyback of up to $6 billion failed to calm the market

Ahead of the operation, the US Treasury announced that it was ready to buy back up to $6 billion of long-term debt maturing in 10 to 20 years. This is three times the standard amount of $2 billion and exceeds the previous promise made in August to increase operations to at least $4 billion.

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However, the Treasury actually accepted offers only for $5.2 billion out of more than $10 billion in bids from investors. Meanwhile, the yield on 10-year bonds rose to 4.98%, and for 30-year bonds, the figure also set a new multi-year high — over 5.4%.

For the market, this was a signal that even direct intervention by the Treasury is currently unable to reverse the fundamental factors pushing rates higher.

Vincent Mortier, Chief Investment Officer at Amundi, stated that the small scale of the operation "does not address the broader issue" of rising yields on US bonds. According to him, the signal that the Treasury sends to the market through the buyback may prove counterproductive as it demonstrates "some nervousness" from the US government.

Morgan Stanley also warned about the unusual nature of such intervention. Ellen Zentner, Chief Economic Strategist at Morgan Stanley Wealth Management, noted:

"We cannot ignore the fact that some actions by the US carry risks typical of emerging market countries. Usually, we have not seen interventionist policies from the US. And when we have, it was a formal, institutionalized process."

Why yields continue to rise

One of the main factors putting pressure on US bonds this week was the sharp rise in oil prices amid the escalation of the US-Iran war and supply issues through the Strait of Hormuz. The price of Brent rose to nearly $110 per barrel, and on September 11, after that, it reduced its growth and traded around $104.

More expensive energy increases inflation risks and raises the likelihood that the Fed will have to maintain high rates for longer or even raise them again. According to the CME FedWatch Tool, the market estimates the probability of a Fed rate hike this month at approximately 84.7%.

Yields on bonds are also pressured by:

• a record level of US government debt exceeding $40 trillion;
• a massive budget deficit;
• high debt servicing costs;
• rising inflation expectations;
• a significant volume of new borrowings;
• bond sales by technology companies to finance investments in AI;
• expectations of strong economic growth due to the development of artificial intelligence.

An additional factor was the statements by U.S. President Donald Trump regarding the possibility of a $5,000 payment to every adult American if the Republicans win the midterm elections. Such a program could cost the budget over $1 trillion and raise concerns about future government spending.

Investors Consider Bessent's Initial Bid Insufficient

Disappointment over the scale of the operation was evident even before it took place. Mark Cabana, head of U.S. rates strategy at Bank of America, stated that the Treasury is effectively "saving" on intervention, which contradicts the "at all costs" approach.

"If you are going to intervene, it should matter more to you to direct the market in a certain direction or achieve a certain level than the price you are willing to pay for it. You can't have both."

DoubleLine portfolio manager Bill Campbell also believes that Bessent should have acted on a larger scale:

"I thought Bessent would understand: with any intervention, your first shot is the best, and you need to come in big right away."

A similar reaction was demonstrated by market participants on X. Analysts at The Kobeissi Letter wrote after the announcement of the buyback increase that even tripling the amount to $6 billion did not stop the rise in yields on 10-year bonds. They noted that the market is effectively "fighting the U.S. Treasury."

You can't make this up.

The US Treasury just announced it is tripling long-term buybacks to $6 billion and yields STILL rallied on the news.

That means the US Treasury went from doubling, to "at least doubling," to tripling long-term bond buybacks and yields are still rising.... pic.twitter.com/WWWtwBpzVw
--- The Kobeissi Letter (@KobeissiLetter) September 9, 2026

Separately, The Kobeissi Letter emphasized that the Treasury is facing a fundamental problem: the U.S. has a deficit of over $2 trillion, spends over $1.2 trillion annually on interest payments, and oil prices have nearly doubled since the start of the war.

In all fairness, US Treasury Secretary Bessent was already behind the 8-ball before he started.

The US is now running $2+ trillion deficits, spending over $1.2 trillion on annual interest expense, and fighting 60 consecutive months of 2%+ inflation.

On top of this, oil prices... https://t.co/Gt4T5kXhz6
--- The Kobeissi Letter (@KobeissiLetter) September 9, 2026

A user on platform X under the pseudonym Hedgie pointed out the contrast between Bessent's statement "I am now in charge here" and the market's reaction. According to him, the Treasury increased the buyback from $2 billion to $4 billion, and then to $6 billion, but after that, the market continued to sell bonds, and the yield on 10-year securities only increased.

At the same time, crypto skeptic Peter Schiff stated that even tripling the buyback of long-term bonds did not stop the rise in yields, and such a situation could support demand for gold.

It is worth noting that Morgan Stanley estimated the maximum possible buyback amount at around $10 billion.