The Treasury Department said on Wednesday that it would repurchase up to $6 billion of its own long-dated debt, fulfilling a promise to at least double its debt buybacks as it seeks to rein in rising bond yields.
The Treasury’s purchases are designed to reduce the availability of longer-dated bonds, pushing their prices higher and lowering yields. Treasury yields underpin borrowing costs throughout the economy, with higher interest rates crimping the affordability of housing, cars and other items bought on credit for many Americans.
The purchases, scheduled to be carried out Thursday afternoon, will increase the size of the Treasury’s buyback operation for debt maturing in 10 to 20 years to $6 billion, from $2 billion last month.
Bond yields, however, rose shortly after the announcement, suggesting investors were underwhelmed by the size of the purchases.
The 10-year Treasury yield rose 0.05 percentage points to roughly 4.85 percent, its highest level since the end of 2023. The 20-year yield rose by a similar amount, to 5.3 percent, also its highest since late 2023.
Speaking at Southern Methodist University on Tuesday, Scott Bessent, the Treasury secretary, defended plans to make the bond market move. He argued that markets were misreading the fundamental dynamics of the U.S. economy and noted that, for investors, American bonds had outperformed the bond markets of many other countries.
A former hedge fund manager who once tried to capitalize on fast-moving market anomalies, Mr. Bessent said his job as Treasury secretary is to ensure that markets are not misreading the fundamental dynamics of the economy.
“Now I try to slow things down, to get people to get out of their fever dream and look at the facts,” Mr. Bessent said.
He also defended his recent intervention in currency markets to prop up the Japanese yen. Despite criticism that he is trying to bend markets to his will, Mr. Bessent made the case that he knows more than investors and has the power to dictate how markets will behave.
“Whenever people say, oh well Treasury secretary is taking a risk, it’s my dream,” Mr. Bessent said. “I have asymmetric information. I am the house now.”
Explaining that he knows what the Bank of Japan and Japanese policymakers are going to do, he added: “You can bet against me if you want.”
The post Treasury Plans $6 Billion in Debt Repurchases to Battle Rising Yields appeared first on New York Times.
