Treasury Department announced Wednesday it is increasing the maximum size of its liquidity support buyback operations for longer-dated nominal coupon securities by at least double, from $2 billion per operation to at least $4 billion per operation. The change covers the 10-to-20-year and 20-to-30-year sectors and takes effect September 9, remaining in place through November 4, 2026. Treasury said the move reflects its desire to provide greater liquidity support in longer-dated nominal sectors, citing the volume of high-quality offers it receives in those operations.
"This increase in buyback operation sizes reflects Treasury's desire to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants, as evidenced by the significant volume of high-quality offers Treasury routinely receives in longer-dated buyback operations," the department said in a statement. Treasury will release an updated buyback schedule at a later date and said it plans to address future buyback sizes at the next Quarterly Refunding on November 4, 2026. Yields fell following the announcement.
The 10-year note shed 6 basis points, settling at 4.647%, while the 30-year bond gave up 9 basis points to reach 5.196%. Bond yields move inversely to prices; a basis point represents one-hundredth of a percentage point. The announcement came as the longer end of the Treasury market had been under sustained pressure.
According to Bloomberg, the move came after 30-year yields climbed back to their highest point since 2007 earlier in the week. Traders were also preparing for a $16 billion auction of new 20-year bonds. The announcement came as a surprise, Bloomberg noted, given that Treasury had published its quarterly buyback schedule only two weeks earlier.
John Briggs, head of U.S. rates strategy at Natixis North America, said the timing was significant. "It is not an accident, in my view, so the more important part is the signaling from it," Briggs said. "If yields go too far, Treasury will try and fight it — and now we know where some pain points are." Peter Boockvar, chief investment officer at One Point BFG Wealth Partners, cautioned that the operation does not reduce the government's debt load.
"This is NOT a debt paydown, it is just a rearrangement of the maturity schedule of Treasuries," Boockvar wrote, according to CNBC. The 30-year Treasury bond touched 5.323% on Tuesday, a 19-year high, before retreating to just under 5.3%. The 10-year yield had also crossed above 4.7%, a level well above the sub-4% rates that prevailed before the Iran War began at the end of February.
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