The U.S. Treasury Department has announced plans to significantly increase its purchases of outstanding government bonds, as a recent sell-off in longer-term debt pushes borrowing costs higher and puts pressure on politically sensitive interest rates.
Treasury said it would at least double the size of its bond buyback operations, increasing the previous $2 billion ceiling per operation to a minimum of $4 billion. The new limit will take effect on September 9 and remain in place through November 4.
The buyback programme allows the Treasury to repurchase older government securities, particularly bonds with maturities of at least 10 years. The move is intended to improve liquidity in the Treasury market and help ease some of the pressure that has driven longer-term yields sharply higher.
Several factors have contributed to the rise in bond yields, including uncertainty over the conflict involving Iran, increased competition for financing from companies investing heavily in artificial intelligence infrastructure, and concerns over widening U.S. government budget deficits.
Long-term Treasury yields have climbed to their highest levels since 2007, raising concerns about the potential impact on mortgage rates and other consumer borrowing costs.
The latest decision represents another effort by Treasury Secretary Scott Bessent to influence conditions in financial markets. Earlier this month, the Treasury worked with Japan in an intervention aimed at supporting the yen after the currency weakened significantly against the dollar.
Bessent had previously warned that instability in Japan’s government bond market could spill over into the U.S. Treasury market, underscoring the close links between major global bond markets.
The Treasury has also recently indicated that it could reduce the amount of longer-term debt it issues in coming quarters, a move that could further influence the supply-and-demand balance in the bond market.
The expanded buyback programme comes as policymakers face growing pressure to contain borrowing costs while maintaining investor confidence in U.S. government debt.
