Treasury to buy $6B in debt, but bond yields rise

The Treasury Department announced Wednesday it will triple the maximum amount of U.S. government debt it can buy back, as part of its effort to tamp down surging bond yields.

The Treasury Department will increase its buyback limit from $2 billion to $6 billion per operation, according to its updated buyback operations schedule . The department will repurchase government debt, specifically 10- to 20-year securities, in a 20-minute operation that will conclude at 2 p.m. EDT on Thursday.

The department initially advised it would increase its buyback limit from $2 billion to “at least” $4 billion last month, as increasing bond yields threatened elevated borrowing costs for millions of Americans.

The day before the department’s initial announcement , the 30-year Treasury bond yield surpassed 5.33 percent, its highest mark since before the 2008 financial crisis.

While not quite at that peak, the 30-year bond yield passed 5.3 percent during Wednesday trading, after the department’s announcement. The note closed at roughly 5.26 percent on Tuesday.

The yield on the 10-year Treasury bond was at more than 4.84 percent at midday Wednesday and earlier reached a 52-week high, after closing at less than 4.81 percent Tuesday.

The 10- and 30-year bond yields are respectively up by roughly 70 and 45 basis points since the start of this year.

Investors have fled the bond market globally because of persistent inflation , economic uncertainty driven by the Iran war and mounting government debt — the U.S. national debt crossed the $40 trillion threshold last month.

The Treasury Department will also buy back 10- to 20-year securities on Sept. 24, two weeks after Thursday’s operation. The department will set its buyback limit in two weeks to at least $4 billion, per its operations schedule.

In its initial guidance about the increase last month, the department noted it will provide more information about future buyback sizes at its next quarterly refunding on Nov. 4.

The buyback increase represents the latest intervention undertaken by Treasury Secretary Scott Bessent. In July, the department unveiled a joint venture with the Japanese government, under which the U.S. began to sell off euros for yen in an effort to boost the Japanese currency — which reached a 40-year low that month.

Markets on Wednesday show the U.S. dollar is equivalent to less than 154 yen after sitting at 164 yen in July.

Bessent on Tuesday warned investors against doubting his strategy, downplaying the notion he is taking a “risk” by propping up the yen.

“I have asymmetric information. … I am the house now,” Bessent said at Southern Methodist University.

“So, when we intervene with the Japanese yen, I have pretty good insight into … what the Bank of Japan’s going to do, what Japanese policymakers are going to do,” the Treasury secretary remarked, adding investors “can bet against me if you want.”