Treasury Secretary Scott Bessent has at least doubled the size of the government's long-dated bond buyback program after criticizing how his predecessor handled the same market. The move comes as long-term yields sit near a 19-year high and US federal debt tops $40 trillion.
Bessent raised the maximum size of each long-dated bond buyback operation from $2 billion to $4 billion on August 19. The Treasury will also run these operations more often starting September 9, continuing through November.
Why yields climbed so high
The Treasury market is worth roughly $32 trillion, the backbone of the global financial system. Gross federal debt, meanwhile, has passed $40 trillion. Long-term yields reached a 19-year high before Bessent's announcement, driven by persistent inflation, heavy corporate borrowing tied to the AI infrastructure buildout, and a risk premium linked to the conflict with Iran. The day after the buyback announcement, Bessent told CNBC that markets were mispricing the situation: "Yields don't reflect the underlying fundamentals," he said on August 20.
A reverse auction meant to lift prices
Buybacks work like reverse auctions in the bond market: the Treasury purchases its own outstanding bonds on the secondary market, shrinking supply so prices rise and yields fall. By doubling the per-operation cap and running the purchases more frequently from September through November, Bessent is betting a concentrated burst of government demand can pull long-term yields back down. Yields pulled back in the immediate aftermath of the announcement. But the reversal was only partial, and the 10-year Treasury yield had settled around 4.7% by late August.
Buybacks reduce the supply of outstanding bonds, but they don't reduce the government's need to borrow. The Treasury still has to fund a growing deficit, so as one hand buys back debt, the other keeps issuing new bonds to cover the bills.
What comes next
Bessent's criticism of former Treasury Secretary Janet Yellen focused on how she managed the mix of short-term and long-term issuance; he has chosen a more interventionist path by buying back debt directly. The September 9 start date for the expanded schedule marks the real test of whether the larger, more frequent operations can sustain lower yields or lose their effect as traders adjust. Analysts have flagged a deeper concern: the buyback program treats the symptom, not the underlying cause — the sheer volume of debt the government needs to finance, which would require congressional action on the deficit that shows no signs of materializing.
Source: Crypto Briefing
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