Treasury Triples Debt Buyback to $6 Billion as Yields Climb

The U.S. Treasury Department announced it will conduct an expanded debt buyback operation, tripling the usual size to up to $6 billion in 10- and 20-year Treasury securities on Thursday. The move comes as benchmark 10-year Treasury yields reached their highest levels since 2023, hovering around 4.85%, with longer-term yields also climbing. Treasury officials stated the enlarged operation is intended to support liquidity and market functioning in longer-dated securities. However, the announcement initially disappointed some investors and market commentators who had anticipated a larger buyback, leading to a rise in bond yields. This sentiment shifted somewhat after a subsequent auction for $39 billion in 10-year notes saw strong demand, helping to pull yields back from their intraday highs. The debt sold at the auction achieved its highest yield since 2007, with demand reported as 2.71 times the amount offered, the highest since 2019. The buyback operation targets securities maturing between February 2037 and August 2046. This action occurs against a backdrop of a national debt exceeding $40 trillion and projected rising annual deficits.