U.S. Treasury to Step Up Long-Dated Buybacks From Sept. 9, Eyeing Larger Trades

U.S. Treasury Secretary Bessent said Monday that the department's next bond buyback operation is scheduled for Sept. 9, signaling that additional repurchases will follow. He added that the Treasury will maintain its regular T-bill auction cadence and provide more updates at the start of the next quarter. Markets are watching whether the Treasury will expand support for the long end of the curve. CNBC reported Monday, citing senior Treasury officials, that the Treasury is considering using cash in the Treasury General Account (TGA) to help fund its enlarged buyback program. The TGA balance is about $950 billion, though officials have not specified how much could be used for repurchases or when. The Sept. 9 operation is tied to measures announced Wednesday, Aug. 19, when the Treasury said it would at least double liquidity-support repurchases for nominal Treasuries in the 10-20 year and 20-30 year sectors. The per-operation cap will rise from $2 billion to at least $4 billion, effective Sept. 9 through the end of this quarter's refunding period on Nov. 4. The Treasury said demand in longer-dated operations has been strong, with many high-quality offers, supporting the case for a larger program. Bessent also suggested the eventual size could go beyond that $4 billion floor, arguing that parts of the long-bond market trade thinly and that the Treasury has "plenty of tools" to address liquidity strains. He said yields, especially on 30-year Treasuries where liquidity is "particularly scarce," are not fully reflecting U.S. economic fundamentals. He added that the buyback pace would depend on conditions, describing short-term volatility as "noise" and framing the effort as an attempt to restore balance in a fragile market. The possibility of tapping the TGA is notable because investors had largely expected buybacks to be financed by issuing more short-term bills to repurchase longer-dated bonds, a mix that could resemble a fiscal version of "Operation Twist." Using TGA cash would reduce reliance on new bill issuance, but officials emphasized that the account's headline balance does not imply nearly $1 trillion will be deployed. The TGA is the government's main operating account at the Federal Reserve, and available buyback funding would be constrained by spending flows, issuance schedules and cash-balance targets. The Treasury's Aug. 19 announcement briefly pushed yields lower, as traders read it as an attempt to ease long-end funding pressure. The rally faded quickly: intermediate and long-dated Treasury prices fell for two straight days last Thursday and Friday, suggesting the buyback boost lasted only a day as attention returned to the large U.S. fiscal deficit, long-term supply and inflation concerns. TD Securities strategist Howard Du said the market is "not fully convinced" Bessent can meaningfully cap long-term yields. With the program set to intensify on Sept. 9, the market focus is shifting from whether the Treasury will act to whether the scale can meaningfully change long-end supply-demand dynamics. Under the current plan, the maximum size for each repurchase in the 10-20 year and 20-30 year buckets will increase to at least $4 billion starting Sept. 9. The Treasury has said it will provide more detail on future buyback sizing at its next quarterly refunding meeting on Nov. 4. Even if buybacks are ultimately funded with TGA cash or additional bill issuance, analysts caution the effort should not be conflated with Federal Reserve-style quantitative easing. Repurchases can influence the maturity mix of debt and the marginal demand for specific issues, but they do not erase the underlying fiscal deficit, debt load or future financing needs. For long-dated Treasuries, the longer-run anchors for yields remain the fiscal outlook, inflation, growth and investor expectations for future Treasury supply.