Treasury Can Send Strong Signal to Market, Swiber Says

Summary

Meghan Swiber discusses how Treasury buybacks and potential back-end issuance cuts are being used to manage longer-term rates. She argues the best expression is long 30-year or 20-year swap spreads rather than outright long duration. She also previews Fed Chair Warsh's Jackson Hole appearance, saying a credible inflation-focused message would flatten the yield curve and anchor long-end yields.

• Treasury is using buybacks to control longer-term rates and market perception, a shift from liquidity provisioning.
• Swiber prefers long 30-year or 20-year swap spreads over outright long 10s or 30s.
• Cutting back-end issuance would send a stronger market signal than buybacks, though the impact may be short-lived.
• The 10-year yield is more important than 20/30-year yields for mortgage rates and the real economy.
• Warsh's Jackson Hole message may focus on inflation and core PCE, potentially flattening the yield curve.
• Lower long-term yields from Treasury policies could ease financial conditions and complicate the Fed's signal.