Treasury poised to buy up to $6B in bonds as Bessent looks to rein in debt costs

The Treasury Department announced Wednesday that the federal government will buy back up to $6 billion of its bonds this week — triple the size of its normal operations — in a bid to rein in longer-term borrowing costs.

The extraordinary move comes as yields on Treasuries have been rising steadily over the past couple of months, threatening to drive up mortgage rates and consumer borrowing costs as the midterm elections approach. Interest rates paid by the U.S. government feed into all other debt costs globally.

But after Treasury's announcement , the yield on the 10-year Treasury went up, suggesting investors are unimpressed by this week's buyback, which was previewed last month.

Treasury Secretary Scott Bessent is aiming to project strength as he looks to strong-arm the markets, which he says are incorrectly pricing U.S. debt.

"I have asymmetric information. I am the house now," he said at an event Tuesday in Dallas, referring to criticism of various market interventions he has undertaken, such as a move to support Japan's currency. "Bet against me if you want."

The department will reabsorb certain older debt securities with maturities of 10 years and 20 years as part of the buyback operation, which will take place Thursday.

Guy LeBas, chief fixed income strategist at Janney Montgomery Scott, said the announcement was always likely to underwhelm markets, which focus much more on the economic outlook and Federal Reserve policy moves than on the supply of bonds in the market. He also noted that Treasury also issued $39 billion in new 10-year securities on the same day, optics that he referred to as "a little goofy."

"The only way in which an intervention can cap interest rates is if it's so absurdly large as to dominate other factors," he said. "The history of interventions is littered with the detritus of policymakers."