The US Department of the Treasury announced Wednesday that it will at least double the volume of its government debt buybacks in the coming months, targeting longer-duration Treasury securities amid a sharp rise in borrowing costs.
The Treasury said it is "increasing, in at least two times, the volume of the repurchase operations to provide greater liquidity support" to bonds with maturities between 10 and 20 years and between 20 and 30 years. The buyback operations will be raised from US$2 billion to at least US$4 billion.
The announcement came after yields on longer-term Treasury securities surged to their highest levels in nearly two decades this week. The 30-year Treasury yield reached above 5.33% on Tuesday, its highest level since June 2007. The 10-year yield, which serves as a benchmark for trillions of dollars in assets globally, also climbed to 20-year highs.
The rapid increase in yields has raised concerns for borrowers, as major loans including mortgages are backed by Treasury securities. The higher yields reflect investor concern over inflation and broader market stress in the fixed income sector.
Following the Treasury's announcement, yields pulled back sharply. The 30-year Treasury yield fell more than 9 basis points to 5.194%, while the 10-year yield declined more than 5 basis points to 4.651%. Stock market futures also surged following the announcement.
Treasury Secretary Scott Bessent led the effort to stabilize the bond market. The buyback operation targets the sensitive longer-duration segment of the Treasury market, which has experienced a buyers' strike since late June.
The Treasury Department said the policy "reflects Treasury's desire to provide greater liquidity support" to the long-term bond market. The accelerated repurchase program aims to address the supply-demand imbalance that has driven yields to multi-year highs and created stress across fixed income markets.
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