The reason for today’s rally is Secretary of the Treasury Scott Bessent said that the US would be buying back more bonds further out on the curve.
- TREASURY DEBT BUYBACK TARGETS COUPONS MATURING IN 2031 – 2034
This amounts to a mini type of QE intervention. It supports bonds and effectively prints more dollars permanently monetizing our debt. That’s why Gold rallied.
Right now, Gold is up over $125 completely obliterating yesterday sell off and is headed towards new recent highs. Silver is not slacking, but it does have some more ground to pick up.
Bessent Starts QE Lite
With 30-year Treasury yields trading near 20-year highs and long-end pressure intensifying, the Treasury Department announced a significant expansion of its liquidity-support buyback program, immediately pushing yields lower while equity futures and gold moved higher.
Treasury said it will at least double the maximum size of buyback operations for longer-dated nominal coupon securities, covering both the 10-to-20-year and 20-to-30-year sectors. The current $2 billion maximum per operation will increase to at least $4 billion beginning September 9.
“Increasing, by at least double, the size of liquidity support buyback operations for longer-dated nominal coupon securities.”
The change will remain in effect through the current refunding quarter, ending November 4. Treasury will provide additional guidance on future buyback sizes at the next Quarterly Refunding, effectively giving the program roughly three months to operate at the larger size before officials need to outline what comes next.
Bessent framed the decision as a liquidity measure (LOL), saying the larger operations reflect a desire to provide greater support in longer-duration sectors where dealers and other market participants have consistently submitted substantial volumes of high-quality securities for sale.
Essentially the treasury is saying: The market is wrong and they aim to prove it.
“This increase in buyback operation sizes reflects Treasury’s desire to provide greater liquidity support in longer-dated nominal sectors.”
The timing is notable. The announcement arrives as long-term Treasury yields have moved sharply higher and Japan has turned seller of UST to increase its support of the sinking yen. At the same time, expanding AI infrastructure spending is producing another large source of corporate borrowing, adding to concerns that private-sector issuance could compete with Treasury supply for investor demand.
Whatever terminology is used, doubling long-duration buybacks represents a meaningful intervention in the Treasury market at a moment when the long end has been under growing pressure. The immediate market reaction reflected that significance: long-term yields fell sharply, while equity futures and gold spiked.
Finally, this is not something that will end here. More of the same will come in bigger numbers as the market will challenge this strategy and force the DOT to double down on its efforts overtime.
