US tries to stabilize government bond market: will more than double buybacks

The US Treasury announced it will more than double its buyback program for long-term government bonds, from $2 billion to at least $4 billion. The move, effective September 9, aims to provide liquidity support for bonds with maturities of 10 to 30 years, after their yields surged to levels not seen in 20 years.

The US Treasury announced today that it will more than double the scope of its buyback program for long-term government bonds, from the current $2 billion to at least $4 billion. The announcement, led by Secretary Scott Bessent, comes after yields on these bonds have surged in recent days to levels not seen in 20 years. The program will focus on bonds with maturities between 10 and 30 years, where investor outflows have been recorded since the end of June. The change will take effect on September 9 and remain in place until November 4. This means the Treasury will become a larger buyer of older long-term bonds, thereby providing liquidity to a segment of the market where strong demand has been noted. Market sources noted that the rise in yields has several causes, including an increase in the premium demanded by investors, a shift in the composition of investors, and growth in the supply of corporate bonds, particularly those issued for investments related to artificial intelligence. The decision indicates that the Treasury is aware of the liquidity challenge and is willing to be a more active player in it.