Treasury buyback announcement extends decline, market sees $6 billion cap as insufficient

BlockBeats News, September 10 - The U.S. Treasury Department stated that it will purchase a minimum of $4 billion and a maximum of $6 billion in long-term government debt in the first operation of its expanded buyback program, demonstrating Bessent's resolve to curb the recent rise in borrowing costs. Treasuries extended earlier declines following the announcement, indicating that the size of the operation was smaller than some investors had anticipated. The success of the expanded purchase program remains to be seen. Yields fell after the initial announcement of the program last month but subsequently rebounded. The benchmark 10-year yield reached its highest level since 2023 last week.

Guha, an economist who previously worked at the New York Fed, stated: "The challenge has always been whether the impact of these interventions can persist without larger fundamental changes." Moreover, the maximum size of the buyback operation does not necessarily mean the Treasury will purchase that amount of debt. However, in buybacks targeting long-term nominal debt, the department tends to purchase the full amount, having failed to do so only twice in 52 such operations since the program was relaunched in 2024. (Jin Shi)