The US Treasury repurchases $6 billion in ultra-long-term bonds: three times the amount planned for early August, with the 30-year yield still reaching its highest level since 2007.

According to Zhihui Finance APP, the US Treasury Department has announced that it will purchase up to $6 billion of longer-dated government bonds on Thursday. This move marks the first operation of its kind under Treasury Secretary Scott Besant's expanded repurchase plan, aiming to curb the recent rise in borrowing costs. The maximum size is three times the $2 billion initially communicated to investors in early August. The original plan was abandoned in a surprise announcement on August 19, when the Treasury said it would “at least double” the size of such operations.

The 20- to 30-year Treasury bonds targeted by Thursday’s repurchase continued their decline on Wednesday following the announcement. The 30-year yield hit an intraday high of 5.38%—approaching the nearly 5.40% peak reached earlier this month, which is the highest level since 2007.

Since the outbreak of war between the US and Iran in late February, rising energy costs have pushed up global bond yields. This has also reversed the outlook for Federal Reserve monetary policy—Chairman Kevin Walsh last week raised the overnight rate for the first time since 2023 to help ease price pressures.

In response to criticism that “this move is tantamount to intervention and does nothing to address fundamental fiscal challenges,” Besant defended his decision to expand the repurchase size. He stated on Monday that he acted when he believed the market had “deviated” from equilibrium prices. He noted that from the August 19 announcement to September 21, the 30-year Treasury yield rose by only about 1 basis point.

Institute of International Finance Warning

Earlier on Wednesday, one of the world’s largest financial industry associations warned that “financial engineering” attempts do not address the underlying dynamics of debt. The Institute of International Finance said in a report that interventions such as purchasing securities on the secondary market “may provide temporary relief but cannot address the structural drivers of rising debt.”

After the last repurchase expansion announcement—on September 9, when the Treasury announced a maximum size of $6 billion—bonds immediately declined. Although this is already three times the original $2 billion announced, some market participants had predicted an even larger figure given that the Treasury theoretically placed no upper limit by stating it would “at least double” the size.

In the end, the Treasury did not reach the maximum amount, purchasing only about $5.2 billion in 10- to 20-year bonds. According to officials, this reflected a lack of competitive bids. In this operation, investors offered the Treasury $10.5 billion in bonds.