U.S. Treasury's smaller-than-expected long-term buyback lifts yields to multi-year highs

BlockBeats reported that on Sept. 11, the U.S. Treasury's first expanded repurchase operation under Treasury Secretary Bessent came in below investor expectations, adding to the selloff and sending long-term U.S. yields to multi-year highs. On Thursday, the Treasury repurchased $5.187 billion of 10- to 20-year notes, short of the previously announced $6 billion maximum. After the operation, the 10-year Treasury yield climbed to its highest level since 2023. Investors submitted $10.5 billion in offers to sell bonds back to the Treasury. While the Treasury is not required to purchase the full maximum, this was the third time since the buyback program was relaunched in 2024 that it did not take the entire amount, across 53 long-term buyback operations. Molly Brooks, a strategist at TD Securities, said the outcome suggests the Treasury's selections were "stricter than usual." She added that if officials want to meet market expectations and complete the full buyback size to help lower long-term rates, future operations may need to accept less attractive bids. In any case, she noted, the precedent of buying back 100% of the maximum has been broken, which could help reset market expectations.