US Treasury Secretary Scott Bessent proposed to curb borrowing costs by increasing the repurchase of US debt. Although this unexpected plan has sparked intense debate over the final results, key market metrics and positions suggest the move is having an impact. Since Bezent announced this plan last week, US Treasury bonds have performed better than equal-term interest rate swap contracts, and the spread between 30-year US Treasury yields and corresponding interest rate swaps has narrowed to its lowest level since February. After the US government proposed “at least doubling” the scale of longer-term treasury bond repurchases, the yield on US benchmark treasury bonds also gradually declined after initial fluctuations. Jason Williams, head of US interest rate strategy at Citigroup, said that this new US Treasury “put option” improved the asymmetry in holding long-term bonds and provided a relatively limited form of potential support.

US Treasury Secretary Scott Bessent proposed to curb borrowing costs by increasing the repurchase of US debt. Although this unexpected plan has sparked intense debate over the final results, key market metrics and positions suggest the move is having an impact. Since Bezent announced this plan last week, US Treasury bonds have performed better than equal-term interest rate swap contracts, and the spread between 30-year US Treasury yields and corresponding interest rate swaps has narrowed to its lowest level since February. After the US government proposed “at least doubling” the scale of longer-term treasury bond repurchases, the yield on US benchmark treasury bonds also gradually declined after initial fluctuations. Jason Williams, head of US interest rate strategy at Citigroup, said that this new US Treasury “put option” improved the asymmetry in holding long-term bonds and provided a relatively limited form of potential support.