U.S. Treasury Secretary Bessent announced an expansion of the scale of U.S. debt repurchases, and the market reaction was short-lived

U.S. Treasury Secretary Bessent announced on Wednesday (19th) that he would at least double the size of the liquidity support repurchase, covering 10- to 30-year U.S. bonds, hoping to relieve selling pressure on the long-term bond market. After the news came to light, U.S. bond yields (bond prices and yields move in opposite directions) fell back. However, U.S. government bonds gave up all their gains on Thursday (20th) after the Treasury Department expanded long-term Treasury bond repurchases, and the 30-year U.S. bond yield returned to pre-policy levels.

According to comprehensive foreign media reports, U.S. Treasury Secretary Bessent has taken a series of unexpected actions this year. Just two weeks after announcing a plan to buy back old Treasury bonds, he announced on Wednesday that he would at least double the size of the liquidity support buyback of 10- to 30-year government bonds. The plan will start on September 9 and continue until November 4, hoping to relieve the selling pressure on the long-term bond market.

After the news was announced, the 30-year U.S. Treasury yield fell by about 10 basis points. However, the bond market rally reversed within a day as the market reassessed buyback measures and long-term problems in the fixed income market.

U.S. government bonds gave up all of their gains on Thursday after the Treasury Department expanded long-term Treasury bond repurchases. The 30-year U.S. Treasury yield rose to 5.251% and the 10-year U.S. Treasury yield rose to 4.704%, highlighting the market's belief that this measure can only temporarily lower government borrowing costs and will be difficult to reverse the structural pressure on the bond market.

JP Morgan senior research analyst Crook pointed out in a client note that these interventions ignore potential structural challenges, and said that although (Wednesday's) actions have forced long-term bond yields to fall, direct government intervention in the market and deviation from regular and predictable bond issuance principles may increase the risk premium required by investors.