As 30-year US Treasury yields rise, the US Treasury Secretary spoke out to calm the market's long-term treasury bond repurchases, which may exceed US$4 billion

The US Treasury Department announced on Wednesday that it will double the repurchase scale of long-term treasury bonds of 2 billion US dollars each to 4 billion US dollars. After the news was announced, the price of long-term US bonds rose rapidly, and yields declined markedly.

In an interview on Thursday, he said that the Ministry of Finance will continue to increase the scale of repurchases, and specifically stated that “the scale of each repurchase may exceed 4 billion US dollars.” He said that the Ministry of Finance plans to play a more active role in the long-term treasury bond market, where yields have risen sharply recently, to improve market trading conditions.

After Bezent made the above remarks, US bond yields declined slightly, but the yield decline that occurred after the Treasury Department announced an expansion of repurchases on Wednesday has basically been recovered. The yield on 30-year US Treasury bonds was recently traded at around 5.235%, and recently rose to a level not seen before the 2008 global financial crisis.

Bessent acknowledged that the long end of the US bond yield curve is under great pressure, and believes that the current level of long-term yield does not match the fundamentals of the US economy. He said that the Ministry of Finance has a “huge policy toolbox” and will decide whether to take more measures in the future based on market conditions.

At the same time, he pointed out that the current market liquidity for 30-year US Treasury bonds is “very poor,” which further increases the need for the Treasury Department to take action. The US Treasury bond market is usually one of the largest and most liquid bond markets in the world, so the obvious deterioration in long-term liquidity has also attracted the attention of policymakers.

The recent rise in long-term US Treasury yields has been driven by multiple factors. On the one hand, the US government's debt and fiscal deficit continue to expand, increasing market concerns about the supply of treasury bonds and fiscal sustainability; on the other hand, the boom in artificial intelligence infrastructure is driving companies to issue corporate bonds on a large scale and compete with US Treasury bonds for investors' capital.

Furthermore, higher yields on sovereign bonds in other major economies, such as Japan, and rising maturity premiums on US bonds have further boosted the long-term financing costs of the US. The so-called term premium refers to the additional income compensation required by investors when holding long-term bonds.

According to data released by the US Treasury Department on Wednesday, the size of US public debt surpassed 40 trillion US dollars for the first time this week. When it comes to this symbolic threshold, Bezent downplayed its importance.

“There is nothing magical about the $40 trillion figure itself; we can gradually solve this problem through economic growth,” Bezent said. He further pointed out that America's message to its allies and trading partners is that promoting global economic growth is an important way to deal with the huge debt burden.

Meanwhile, Bezent revealed that he will meet with Russell Vought, the director of the US Office of Administration and Budget, to discuss “fiscal consolidation.” Against the backdrop of US debt exceeding 40 trillion US dollars and long-term financing costs remaining high, how to control the fiscal deficit, improve the debt structure, and reduce the interest burden is becoming an important fiscal challenge facing the US government.