WASHINGTON — The U.S. Treasury's $6 billion bond buyback operation failed to arrest the selloff in longer-dated government debt Wednesday, with the 10-year yield jumping to 4.85 percent—the highest level since late 2023. Yields on 20 and 30-year Treasuries also climbed sharply, signaling that investors viewed the intervention as insufficient to meaningfully alter supply-demand dynamics in a market of that scale.
Treasury Secretary Scott Bessent unveiled the expanded buyback strategy last month, directly targeting the steep rise in long-term borrowing costs that has pressured the White House's economic agenda. The operation, the first since the Treasury committed in August to double regular longer-term bond purchases from $2 billion to $4 billion, aimed to "keep the market in equilibrium," Bessent said.
Market participants on Wall Street had expected a larger intervention, with many dealers anticipating buybacks in the $6 billion to $8 billion range. "You can't push the bond market around," said Ryan Sweet, chief economist at Oxford Economics. "The bond market is just huge. $6 billion is a big number, but not relative to the size of the U.S. bond market."
Under these operations, the Treasury acquires older, less actively traded government bonds and replaces them with shorter-term debt. The purchase of long-term Treasuries is intended to lift prices and compress yields on the remaining bonds in circulation.
Multiple forces have driven the selloff beyond the buyback disappointment. The national debt's breach of $40 trillion has weighed on investor sentiment. Oil prices climbed above $100 per barrel Wednesday following reports of bombing targeting Iranian energy infrastructure, fueling expectations of energy-driven inflation and higher future rates. Minutes from the Federal Reserve's July meeting, which indicated officials raised the possibility of needing higher rates unless inflation cooled, have also colored the outlook for monetary policy.
Yields have surged not only in the United States but globally, with Japan and the United Kingdom seeing multi-decade highs in sovereign borrowing costs. Sweet warned that persistently elevated yields would compound stress on the struggling U.S. property market. "The Treasury's actions are fairly small," he said. "We need to give it time to see what the long-term rate impact is after the initial knee-jerk reaction."
