Bessent: Treasury Debt Buyback Could Top $4B

Treasury Secretary Scott Bessent said an accelerated government debt buyback operation could be larger than the announced $4 billion per issue. He made the remarks in a live CNBC interview on Thursday, a day after the Treasury said it would double its scheduled $2 billion in buybacks of longer-dated government debt.

Bessent stated his department intends to make a market in longer-dated securities, where yields have risen sharply. While confirming the buyback size would increase, he declined to attach a specific figure, saying it would depend on market conditions. He said they would see what the conditions are and analyze them.

Market Reaction and Yield Levels

The Secretary's comments caused a brief easing in yields, which had largely reversed a decline following Wednesday's initial announcement. The 30-year bond yield was most recently trading around 5.235%, a level not seen since before the 2008 global financial crisis. The benchmark 10-year yield also briefly pulled back before moving higher, recently up about 5 basis points to 4.704%.

Bessent emphasized that the level of yields did not drive the buyback decision. He said the goal is for fundamentals to control the market. He told CNBC that all they are trying to do is get people to focus on the fundamentals and not trade the headlines during a quiet period in a thin market.

Rationale for Intervention

The Treasury chief acknowledged pressure at the long end of the yield curve, stating current trading levels do not reflect economic conditions. He characterized liquidity for the 30-year bond as very poor, providing another incentive for Treasury to intervene in what is normally a strong market.

Bessent said part of it is signaling to show that they believe the yields do not reflect the underlying fundamentals. He noted the Treasury has a big toolkit to address market conditions.

Factors Driving Higher Yields

Multiple factors have combined to push yields higher: Surging debt and deficits in the U.S.; competition from other areas including corporate debt issuance related to artificial intelligence and higher yields from other sovereigns such as Japan, and escalating term premiums, or the extra yield investors demand to hold government debt.

On the fiscal front, Bessent said he will meet with Russell Vought, head of the Office of Management and Budget, to discuss fiscal consolidation. Treasury figures released Wednesday showed the national debt crossed the $40 trillion mark this week.

Bessent downplayed the milestone, saying there is nothing magic about the 40 trillion number, and that the U.S. Can grow its way out of that. He added that the message to allies and trading partners is that global growth is the way to manage the debt.