๐จ MAJOR: Treasury just announced another $6 billion bond buyback for October 1, and the last one didn't go the way Bessent hoped.
The Treasury confirmed today it will purchase up to $6 billion of 10-to-20-year Treasury bonds in a liquidity operation on October 1, the same size as the September 10 operation, itself triple the size of the prior long-dated buyback.
Here's the twist most coverage is missing: the September 10 operation was supposed to calm the bond market. It did the opposite. The 10-year yield actually spiked to 4.95%, a multi-year high, the same day Treasury bought $5.19 billion in bonds. Investors had priced in a "shock and awe" intervention of $7-10 billion; when $6 billion showed up instead, the market read it as insufficient and sold off harder.
The scale problem is real. A $6 billion buyback against roughly $29 trillion in outstanding Treasury debt works out to about 0.01% of the total market, a number market participants cited directly as proof the operation couldn't meaningfully offset the deeper fundamentals driving yields higher: elevated inflation expectations, growing deficit concerns, and continued heavy issuance.
Bessent has called this strategy a "Treasury twist," echoing the Fed's old Operation Twist playbook, aimed at bringing long-term borrowing costs down. The goal is legitimate: buying up older, less-liquid Treasuries to support market functioning. But so far, stronger Treasury demand hasn't translated into lower yields, it's coincided with them climbing to fresh highs.
Whether October 1 lands differently depends on size and market expectations once again. If this operation surprises to the upside the way September's disappointed, watch for the same pattern to repeat.
#Treasury #Bonds #Yields #Bessent #Markets
The Treasury confirmed today it will purchase up to $6 billion of 10-to-20-year Treasury bonds in a liquidity operation on October 1, the same size as the September 10 operation, itself triple the size of the prior long-dated buyback.
Here's the twist most coverage is missing: the September 10 operation was supposed to calm the bond market. It did the opposite. The 10-year yield actually spiked to 4.95%, a multi-year high, the same day Treasury bought $5.19 billion in bonds. Investors had priced in a "shock and awe" intervention of $7-10 billion; when $6 billion showed up instead, the market read it as insufficient and sold off harder.
The scale problem is real. A $6 billion buyback against roughly $29 trillion in outstanding Treasury debt works out to about 0.01% of the total market, a number market participants cited directly as proof the operation couldn't meaningfully offset the deeper fundamentals driving yields higher: elevated inflation expectations, growing deficit concerns, and continued heavy issuance.
Bessent has called this strategy a "Treasury twist," echoing the Fed's old Operation Twist playbook, aimed at bringing long-term borrowing costs down. The goal is legitimate: buying up older, less-liquid Treasuries to support market functioning. But so far, stronger Treasury demand hasn't translated into lower yields, it's coincided with them climbing to fresh highs.
Whether October 1 lands differently depends on size and market expectations once again. If this operation surprises to the upside the way September's disappointed, watch for the same pattern to repeat.
#Treasury #Bonds #Yields #Bessent #Markets
