Treasury Secretary Scott Bessent’s shock bond buyback plan unraveled Thursday as yields climbed back to their pre-announcement levels.
On Wednesday, Bessent announced the Treasury would at least double its buybacks of long-dated bonds — from $2 billion to at least $4 billion per operation, starting Sept. 9.
The 30-year Treasury yield fell sharply after the announcement, the Financial Times reported, then reversed course Thursday, wiping out nearly all of the gains.
“While increasing liquidity buy-back operations by $2 billion might seem like rearranging deckchairs on the Titanic given the U.S. national debt of $40 trillion…” ING’s Chris Turner told clients Thursday morning.
The national debt hit a record $40 trillion on Wednesday, the same day as the announcement, according to Treasury Department data.
“Interventions such as this look like a sticking plaster,” Eoin Walsh, portfolio manager at TwentyFour Asset Management, told the Financial Times.
The moves “belie the underlying structural challenges and do nothing to address them,” Maia Crook, senior research analyst at JPMorgan Chase, said in a client note cited by CNBC.
“It’s the equivalent of tossing paper towel into a tsunami,” George Catrambone, head of fixed income at DWS Americas, told Bloomberg.
Yields have risen because of forces beyond Bessent’s control, according to The New York Times — the mounting federal deficit, inflationary pressure from the Iran war, and a flood of corporate debt tied to the artificial intelligence buildout.
“This intervention is incremental and tactical, just trying to slow down the long-end selling and an attempt to buy time,” George Goncalves, head of U.S. macro strategy at MUFG, told Bloomberg.
Dean Baker, economist and co-founder of the Center for Economic and Policy Research, wrote on Bluesky that Bessent “can’t even manipulate the bond market competently.”
Gideon Rachman, chief foreign affairs commentator at the Financial Times, wrote on X that Bessent spent years working for George Soros’s fund and helped it break the Bank of England in 1992.
“You would think he might have learned some lessons about the relative strengths of markets and government intervention?” Rachman wrote.
“US 30-YEAR TREASURIES ERASE GAINS FROM BUYBACK ANNOUNCEMENT,” Jim Bianco, president of Bianco Research, wrote on X Thursday morning.
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