US Treasury Secretary Bessent said on Sept. 9 that last month’s expansion of the US Treasury buyback program was intended to calm what he described as a growing "frenzy" in the bond market and help prices move back toward equilibrium. He said the Treasury cannot set the market’s equilibrium price, but it can try to reduce excessive speculation.
Bessent also pushed back on the idea that Treasury buybacks are equivalent to Federal Reserve quantitative easing. He said the measure is closer to the Fed’s past Operation Twist than to QE. In his remarks, he added that if investors were genuinely worried about the creditworthiness of US debt, they would be selling Treasuries and buying German government bonds, but he said current market behavior does not show that.
The comments came after the yield on the 30-year US Treasury rose to its highest level since 2007, the backdrop to the enlarged buyback plan.
US Treasury Secretary Bessent said on Sept. 9 that last month’s expansion of the US Treasury buyback program was designed to cool what he called a growing "frenzy" in the bond market and help prices return to equilibrium.
Bessent said he cannot change the market’s equilibrium price, but he wants to reduce excessive speculation. He also said that if investors were truly concerned about the credit quality of US debt, they would be selling US Treasuries and buying German government bonds. He said current market action does not reflect that.
Buybacks not the same as quantitative easing
Bessent rejected the idea that Treasury buybacks are equivalent to Federal Reserve quantitative easing, saying the move is more similar to the Fed’s past Operation Twist.
The expanded buyback plan came as the yield on the 30-year US Treasury climbed to its highest level since 2007.
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