(Bloomberg) -- Treasury Secretary Scott Bessent is set to reveal how far he’s initially willing to go restrain US bond yields via an expanded buyback program that has Wall Street dealers on edge.
The Treasury Department is expected to announce on Wednesday the size of the next day’s operation to repurchase outstanding 10-year to 20-year securities; past precedent indicates it would be at 11 a.m. in Washington. It will be the first such release since the Treasury shocked market participants Aug. 19 by saying it would “at least double” the $2 billion sizes it had penciled in just two weeks before.
Bessent has repeatedly declined to tip how big the Sept. 10 buyback will be, though his public remarks have helped fan expectations among many that it will exceed $4 billion. On Tuesday, he characterized the initiative as aimed at cooling “this fever that was building” in the market, in an apparent reference to a selloff that last month sent longer-dated yields to the highest in years.
With 10-year yields, which are key for US mortgage rates, now even higher than last month’s levels, stakes are high. Coming in at just $4 billion could prove a disappointment to investors, adding to selling pressure in the world’s biggest bond market.
But opting for a giant total — Morgan Stanley calculates $10 billion as a practical cap — could set a new baseline for subsequent longer-dated buybacks, with the next one due in two weeks. It could also suggest Bessent’s angst about yield levels has deepened further since last month’s surprise move.