Treasury Announces Up to $6 Billion Buyback of Long‑Term Securities Amid Rising Bond Yields

James Demmert, chief investment officer at Main Street Research, appeared on “Making Money” to discuss the implications of rising global Treasury yields and changing sentiment in the AI sector.

On Wednesday, the Treasury Department announced it plans to repurchase up to $6 billion of longer‑dated U.S. debt this week.

The Bureau of the Fiscal Service said it will acquire up to $6 billion of 10‑year notes and 20‑year bonds. The operation is set for Thursday from 1:40 p.m. to 2:00 p.m. ET, targeting securities maturing between February 2037 and August 2046.

The move follows Secretary Scott Bessent’s earlier statement that the Treasury would conduct buybacks of at least $4 billion through early November, up from the usual $2 billion per operation.

Treasury yields have remained elevated in recent years, driven by persistent inflation that has been intensified by the Iran conflict, pushing interest rates higher.

Bessent Says Treasury Auctions Will Proceed Normally Despite Expanded Buyback Program

Secretary Scott Bessent disclosed the increased buyback size last month. (Krisanne Johnson/Bloomberg via Getty Images)

In its August announcement, the Treasury described the buyback as a way to “provide greater liquidity support to longer‑dated nominal sectors where market participants consistently show strong interest, as reflected by the substantial volume of high‑quality offers it typically receives in such operations.”

Following the announcement, yields on both the 10‑year note and the 20‑year bond increased.

The 10‑year note yield climbed to its highest level since 2023, surpassing 4.85 % during Wednesday’s trading, while the 20‑year bond yield rose above 5.3 %.

Treasury Yields Remain Near Multi‑Year Highs as Energy Prices and Government Debt Drive a Bond Sell‑Off

The Treasury said it will conduct a $6 billion buyback of long‑dated Treasuries this week. (Michael Nagle/Bloomberg via Getty Images)

Matt Cole, CEO of Strive Asset Management, told FOX Business that the market views the buybacks as insufficient, describing them as a “bluff” given their modest scale.

Cole noted that buybacks of $2 billion or $6 billion are tiny compared with the nation’s debt exceeding $40 trillion and the anticipated future issuance, given annual deficits projected to top $2 trillion.

He explained, “With so much debt outstanding and a continued need to issue more over the next few years, the market is signaling that these amounts are insufficient.” He added, “Even increasing the buyback to $12 billion would not resolve the underlying issue.”

U.S. National Debt Surpasses $40 Trillion for the First Time

He observed that many developed economies face comparable debt challenges, and corporate borrowing is rising to fund AI expansion, with yields competing against those of U.S. and foreign government debt.

In remarks on Tuesday, Secretary Bessent said that if investors were worried about U.S. bond safety, they would likely shift to German or Japanese securities, yet the U.S. Treasury market has continued to outperform those alternatives.

Federal Reserve Chair Kevin Warsh and other central bank policymakers will assess potential interest‑rate increases at their upcoming meeting. (David Paul Morris/Bloomberg via Getty Images)

Cole added that while he views Secretary Bessent and Fed Chair Kevin Warsh as capable leaders, they face a challenging environment due to the nation’s fiscal outlook.

“The issue lies not with the individuals but with a structural debt crisis,” he said, adding that they should, to the greatest extent possible, pursue policies that foster high‑growth economic conditions.

Cole remarked, “Although Secretary Bessent speaks of growing the economy out of the debt problem, I doubt that growth alone can resolve it. Nevertheless, pursuing growth remains the best approach, and at minimum it could help prevent the U.S. from slowing excessively during the AI‑driven data‑center expansion.” He stressed the importance of the United States competing successfully in AI to spur growth.

He added, “Among the limited options available, attempting to grow the economy is the most viable, though I believe a genuine solution would require curbing spending—a step that seems unlikely.”

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