US Treasury's first expanded long-bond buyback operation falls short of cap
Macro
The US Treasury launched an expanded long-bond buyback program aimed at supporting the bond market, completing the buyback of 5.19 billion dollars of 10- to 20-year notes on the 10th. The amount fell short of the 6 billion dollar cap, leading to disappointment in the market. This was the first operation since Treasury Secretary Bessent announced the expanded buyback program, and it marks only the third time, including this one, that a buyback has failed to reach its cap. The next buyback is on September 24, with six more scheduled for October 1, 6, 8, 15, and 27, and November 4, and the scale remains unclear, described by the Treasury Secretary as "at least double the usual amount." What the Treasury purchases are older, thinly traded government bonds, which may still support the Treasury market and help push yields lower, but it merely swaps old debt for new debt and is not quantitative easing. While the market notes that the measure could improve liquidity, a growing view holds that it is insufficient to offset concerns about inflation and the expansion of federal debt. Treasury Secretary Bessent remains confident in the expanded buyback program, saying that because purchases are made at low prices, not as much was bought back. Some market participants also place little importance on the first operation's results, and attention will be on the results and effects of the six remaining buybacks.
