U.S. Treasury Drastically Expands Buybacks... 30-Year Yield Plunges 10bp

Buyback Program for Long-Term Treasurys to Be At Least Doubled

Treasury: "Strengthening Liquidity Support for Long-Term Bonds"

30-Year Yield Falls to 5.19%

The U.S. Department of the Treasury has decided to at least double the scale of its long-term Treasury buybacks, as long-term Treasury yields have soared to their highest levels in 19 years. Following this decisive market intervention by the Treasury, the yield on 30-year Treasurys plunged by about 10 basis points (1bp = 0.01 percentage point) during the session.

According to the U.S. Treasury Department and Bloomberg News on August 19 (local time), the Treasury announced that it will increase the maximum size of each liquidity-support buyback operation targeting 10–20 year and 20–30 year nominal Treasurys from the previous $2 billion to at least $4 billion. This decision comes just two weeks after the initial buyback schedule for the current quarter was announced. The expanded buyback program will take effect starting September 9.

Scott Bessent, U.S. Secretary of the Treasury. 2026.05.13. Photo by Dongju Yoon

The Treasury explained, "This increase in the scale of buybacks is intended to provide more liquidity to the long-term nominal Treasury segment, which continues to see strong participation from market participants."

Soon after the announcement, long-term Treasury prices surged. In contrast, the yield on 30-year U.S. Treasurys dropped about 10 basis points, falling to the vicinity of 5.19% during the session. The 10-year yield also declined, settling in the 4.64% range. Earlier, the 30-year yield had surpassed 5.3% this week, reaching its highest level since 2007.

Recently, the U.S. long-term bond market has faced intense selling pressure, driven by a combination of factors: large-scale fiscal deficits, increased Treasury supply, rising international oil prices and inflation fears due to the war in Iran, as well as a surge in corporate bond issuance amid broader investments in artificial intelligence (AI). As demand for long-term Treasurys weakened, the cost for the U.S. government to borrow for extended periods climbed to its highest level in decades.

This pressure was also reflected in Treasury auctions. Last week's auction of 10-year Treasurys yielded the highest rate for the maturity since 2007, and the subsequent 30-year auction saw the highest yield since 2001. The market now awaits a 20-year Treasury auction worth $16 billion later today.

The Treasury's buyback is a debt management tool in which the department repurchases existing market-traded Treasurys before maturity. This is distinct from the Federal Reserve’s quantitative easing (QE), in which the Fed purchases Treasurys for monetary policy purposes. The Treasury utilizes buybacks to improve liquidity in less actively traded market issues and to mitigate volatility in cash balance management and Treasury issuance.

The U.S. Treasury launched its regular Treasury buyback program in May 2024. At that time, the department announced it would conduct liquidity-support buybacks of nominal Treasurys at a maximum size of $2 billion per operation.

However, the market is focusing on the timing of this decision, as the Treasury abruptly more than doubled its planned buyback size right after a spike in long-term yields.

Jack McIntyre, portfolio manager at Brandywine Global Investment Management, commented, "The current administration needs results, and this could manifest as an attempt to artificially suppress long-term Treasury yields," adding, "It is a situation where something must be tried."

John Briggs, Head of U.S. Rates Strategy for North America at Natixis, also said, "We have learned that if yields rise excessively, the Treasury will act to curb them. We now have some idea of the threshold at which yields become painful for the Treasury."

Scott Bessent, U.S. Secretary of the Treasury, has emphasized the 10-year Treasury yield as a key indicator for assessing financial market conditions since taking office. Last year, he stated that the Treasury would use a variety of policy tools, including the buyback program, if the functioning of the Treasury market faced disruptions.

Accordingly, some in the market interpret this measure as more than just liquidity support—viewing it as a signal that the Treasury is attempting to calm soaring long-term yields. However, the buyback’s scale itself remains limited compared to the overall U.S. Treasury market, and the Treasury continues to stress that the official purpose of this measure is to improve liquidity in the long-term market segment.

This content was produced with the assistance of AI translation services.