US Treasury to Buy Up to $6 Billion in Long-Dated Debt

Summary

Bloomberg's Michael McKee reports that the US Treasury will buy back up to $6 billion of 10- and 20-year notes under its expanded buyback program, above the expected $4 billion and prior $2 billion size. Markets interpret the increase as a signal that officials are serious about reducing long-end borrowing costs, though 10-year yields rose immediately after the news. The program is officially framed as a liquidity operation for off-the-run Treasuries.

• Treasury to conduct expanded buyback of up to $6 billion in 10- and 20-year notes.
• First operation under the expanded program begins September 10.
• Size exceeds the $4 billion expectation and previous $2 billion normal amount.
• Market interprets the ramp-up as an effort to bring down long-term rates.
• Immediately after announcement, 10-year Treasury yields rose.
• Treasury officially cites liquidity needs for off-the-run Treasuries.