The U.S. Treasury said Wednesday it will at least double the size of its debt buyback operations for longer-dated bonds, and markets rallied in response. Stocks, bonds and gold all gained while the dollar sank, as investors read the move as a signal that Treasury Secretary Scott Bessent is willing to act more aggressively to cap rising yields.
The Treasury Department said Wednesday it will more than double the size of its government debt repurchases, targeting the 10- to 20-year and 20- to 30-year segment of the market. The maximum size of each buyback operation will rise from $2 billion to at least $4 billion, starting Sept. 9 and running through Nov. 4.
Yields dropped immediately. The benchmark 10-year Treasury note fell 6 basis points to 4.647%, while the 30-year bond tumbled 9 basis points to 5.196%. The move follows a summer run-up that had pushed 30-year yields to their highest level since 2007 this week, with the 10-year yield lingering near two-decade highs.
Stocks, gold and the dollar react
The Dow Jones Industrial Average rose 0.34% and the S&P 500 gained 0.52% in recent trading, while the Nasdaq Composite was down modestly.
Gold also climbed, rising more than 2% and reclaiming $4,500 an ounce.
The dollar was the session's biggest loser. The ICE U.S. Dollar Index fell 0.8% to 98.83, touching its lowest level since late May.
Why the market read it as a signal
Strategists said the buyback increase is small next to the roughly $31 trillion Treasury market, but investors focused on what it signals about Bessent's willingness to intervene. Jill Cetina, a former vice president for bank supervision at the Dallas Fed, said. According to MarketWatch: "The market took this as a significant intervention."
Guy LeBas, chief fixed-income strategist at Janney, said buybacks totaled $32 billion in 2024, $78 billion in 2025 and about $50 billion so far in 2026. He said he suspects Bessent is willing to take aggressive action to cap yields at roughly 4.75% on the 10-year and 5.25% on the 30-year.
Not everyone welcomed the move. Cetina questioned where the limit lies if buybacks are expected to cap long-dated yields without addressing the deficit pressures behind their rise. Economist Mohamed El-Erian noted that financing the buybacks will require Treasury to issue more short-term debt, and argued that fundamental fixes, such as shrinking the federal budget deficit, are still needed.
The announcement also lands just ahead of next week's Jackson Hole economic symposium and came the same day as a 20-year Treasury auction that investors had been watching closely.
Sources: U.S. Department of the Treasury, MarketWatch, CNBC
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