Yields on the 10-year and 30-year notes erased Wednesday’s reductions and rose higher than before the announcement, forcing the US Treasury to reassure markets less than a day after tripling the extent of its debt buybacks.
The action compelled US Treasury Secretary Scott Bessent to publicly state that the $4 billion (€3.4 billion) maximum per operation on Wednesday was a floor rather than a hard restriction.We will be increasing the magnitude of the buyback, which we do on a regular basis. It might be more than the $4 billion per issue, I would say,” Bessent said.
The US Treasury Secretary responded, “Part of it is signalling here, and to show that we believe that the yields don’t reflect the underlying fundamentals,” when questioned about the explanation. We don’t know when we will be able to get past this Iranian crisis. Bessent’s appearance alone had little affected the bond market, according to Krishna Guha of Evercore ISI, who characterized the idea as “a weak form of Operation Twist” that might backfire if it is interpreted as a hint Washington is having trouble financing itself cheaply.
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