The Treasury Department on Wednesday said it will buy back up to $6 billion of government debt in an operation aimed at keeping bond markets functioning.
The much-anticipated announcement triples the normal buyback operation and follows an announcement Aug. 19 from Treasury Secretary Scott Bessent that the department would at least double the normal amount for already-issued securities.
Though the operation ostensibly is aimed at keeping government debt markets liquid — in this case for 10- and 20-year notes — the extraordinary measure also has been seen as an effort to put a lid on Treasury yields, which had hit highs not seen since prior to the global financial crisis in 2008.
Market reaction, however, was negative. Treasury yields rose further, with long-dated securities rising about 5 basis points each. The benchmark 10-year issue hitting 4.853%, the 20-year climbed to 5.314% while the 30-year bond rose 5 basis points to also punch through what had been seen as the important 5.3% level, most recently yielding 5.307%. One basis point equals 0.01%.
There had been speculation heading into Wednesday's announcement that the buyback level could be many times the initial release, in which Treasury said the amount will "at least" double the normal $2 billion operation.