The US Department of the Treasury has decided to buy back up to $6 billion in long-term bonds. This measure aims to stabilise the public debt market following recent fluctuations in bond yields.
The intervention by the US Department of the Treasury comes after the announcement by Scott Bessent, who seeks to stabilise the public debt market through an expanded buyback programme. This will be the first buyback operation since Bessent expanded the programme, aimed at bolstering the world's largest bond market.
The amount of $6 billion represents an increase from the announcement in mid-August, where the Treasury reported it would increase its long-term bond purchases to $4 billion. This aims to support prices in a debt market that reaches $32 trillion.
The measure is seen as crucial to halt the recent trend of selling in the long-term bond market, which, according to Bessent, “does not reflect the underlying fundamentals of the market.” The yield on Treasury bonds rose slightly after the announcement, with the 10-year bond registering a yield of 4.85%, the highest since late 2023.
However, this new policy has drawn criticism on Wall Street. Investors warn that it could undermine the Treasury's credibility and complicate the Federal Reserve's efforts to control persistently high inflation. Additionally, higher yields could increase financing costs for consumers and businesses.
The upcoming expansion of this buyback programme will be a focal point for the market, as analysts continue to assess the impact of these measures in the current economic context.
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