BlockBeats message: On September 11, in the U.S. Treasury Secretary Bessent’s first expanded-scale Treasury repo operation, the amount of long-dated Treasuries purchased fell below investors’ expectations, intensifying the sell-off and pushing U.S. long-term Treasury yields to their highest levels in years.

On Thursday, the U.S. Treasury conducted a repo purchase of $5.187 billion in 10- to 20-year Treasuries, below the previously announced maximum repo size of $6 billion. After this operation, the yield on the 10-year U.S. Treasury rose to the highest level since 2023. During the operation, investors submitted bond sell offers totaling $10.5 billion to the Treasury. Although the Treasury was not required to buy the maximum amount, this marked the third time—out of 53 long-bond repo operations since the plan was reinstated in 2024—that it chose not to buy up to the cap.

Molly Brooks, a strategist at Dominion Securities, said, “This indicates that the Ministry of Finance’s choice is more stringent than usual. If the Ministry of Finance wants to meet market expectations and complete the full amount of buybacks to bring down long-end yields, then in future buyback operations it may have to accept bids with less attractive pricing. At the very least, the precedent that the Ministry of Finance previously bought back the maximum amount 100% has been broken, which may help to re-balance market expectations.”