Treasury Announces a Buyback Surprise

A surprise move from the Treasury Department just gave long-term bond markets a jolt. On Wednesday, the agency said it will at least double the size of the government's buybacks of its own longer-term debt starting Sept. 9. That's a revision of a "tentative buyback schedule" it released only two weeks ago, reports NBC News, which calls it an "unusual shift." The 30-year yield quickly slipped from 5.28% to 5.19%, while the 10-year eased to 4.64% from 4.71%—"notable," per the AP, but well off the 3.97% it was at prior to the war with Iran.

The New York Times reports Treasury buybacks will increase from $2 billion per weekly operation to at least $4 billion. The move effectively makes the Treasury a bigger buyer of longer-dated bonds that have been under heavy pressure, helping cool yields that recently hit their highest level since 2007, making borrowing more expensive. But the Times points out it represents a "relatively small increase in the size of buybacks, compared with the overall size of the Treasury market. There are almost $30 trillion of Treasuries outstanding, and the market consistently trades more than $1 billion per day."