U.S. Treasury Doubles Size of Longer-Dated Bond Buybacks

The U.S. Treasury Department will double the size of its liquidity-support buyback operations for longer-dated nominal coupon securities from $2 billion to at least $4 billion per operation. The increase will cover the 10- to 20-year and 20- to 30-year sectors and will take effect from September 9 through November 4, Treasury said on Wednesday.

The move follows a major selloff in government bonds that pushed the 30-year Treasury yield to its highest level since 2007. Yields rose despite a scheduled $2 billion buyback of 20- and 30-year bonds on Tuesday, amid concerns over the U.S. fiscal outlook and broader market uncertainty. The 30-year yield eased on Wednesday, falling as low as 5.187% after the Treasury announcement.

Treasury said the larger operations reflect strong demand from market participants and the need to provide greater liquidity in longer-dated securities. Investors had offered nearly $20 billion of bonds for Tuesday’s $2 billion repurchase, highlighting the strong demand for the program. The next scheduled buybacks are set for September 10 for 10- to 20-year securities and September 24 for 20- to 30-year bonds.

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