Can't you hold back even if you buy it three times? The US Treasury plans to buy $6 billion US Treasury 10-year bonds, and the yield rises to 4.84%

The Zhitong Finance App learned that the US Treasury Department announced on Wednesday that it will buy 6 billion US dollars of US Treasury bonds through a repurchase operation, which is three times the scale of a regular repurchase operation. The Treasury Department said the move was aimed at improving the liquidity of the US Treasury bond market and maintaining the smooth operation of the market. However, against the backdrop that long-term US bond yields had previously risen to a rare high level since before the 2008 global financial crisis, this drastic expansion of the scale of repurchases is also viewed by the market as the latest move by the Treasury Department to “cool down” US bond yields, which continue to rise.

According to information released by the US Treasury Department, this repurchase is mainly for 10-year and 20-year issued US Treasury bonds. The actual operation will take place on Thursday. The entire repurchase window lasts 20 minutes and will end at 2 p.m. EST.

The current $6 billion repurchase scale is three times that of regular operations, and it also further fulfills US Treasury Secretary Bessent's previous promise to expand the US debt repurchase program.

Bezent announced on August 19 that the Treasury Department will at least double the normal repurchase scale for issued US bonds. With the recent continuous sell-off of long-term US bonds and rising yields, the Ministry of Finance has finally expanded the scale of a single repurchase to three times the normal level, which has attracted great attention from the market.

Judging from the official purpose, the US Treasury's bond repurchases are mainly used to improve the liquidity of old securities and improve the efficiency of the treasury bond market. As new bonds continue to be issued, the trading activity of some treasury bonds issued earlier may decline. By repurchasing these securities from the secondary market, the Ministry of Finance can improve the liquidity of relevant maturity bonds.

However, the timing of this operation is particularly sensitive. Recently, the yield on US long-term treasury bonds has continued to rise, and at one point hit a high level not seen before the 2008 global financial crisis. Therefore, the market also generally sees the Ministry of Finance expanding the scale of repurchases as one of the measures to try to curb the further rapid rise in US bond yields.

However, after the Ministry of Finance announced the news, the bond market did not immediately develop in the direction that policymakers might have hoped. The yield on US Treasury bonds rose further on Wednesday. The benchmark 10-year US Treasury yield once rose to 4.841% and rose close to 4 basis points on the same day. The bond yield is the opposite of the price trend, which means that after the Treasury announced an expansion of repurchases, the US bond market is still facing selling pressure.

The current market reaction also means that simply expanding the scale of bond repurchases has not yet been able to reverse investors' cautious attitude towards long-term US bonds. Just the day before, Bezent explained the reason for the Treasury's expansion of the old term US bond repurchase program, saying that previously the bond market was in a state similar to a “fever,” and his duty was to try to push the market back to a more balanced level. At the same time, Bezent stressed that the Ministry of Finance's buyback action is not quantitative easing, but is closer to improving market operation and adjusting debt structures.

The actual $6 billion buyback on Thursday will be an important observation window for the market. After the Treasury directly triples the repurchase scale, investors will pay close attention to the actual bidding situation and the market reaction of 10-year and 20-year US bonds to determine whether this measure can actually improve liquidity and ease the pressure on the recent rise in long-term US bond yields.