RESOLVING THE LEDGER
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U.S. Treasury Secretary Scott Bessent made waves on Wall Street last Wednesday when he announced a plan to "at least double" the amount of buybacks of long-term U.S. Treasury bonds. Basically, this means the U.S. Treasury is trying to drive more demand for longer-duration U.S. government bonds.
By buying back a larger amount of longer-dated Treasury bonds, the yields on those bonds would (ideally) go lower. In this way, the Treasury Department intends to reduce borrowing costs for the government and, ultimately (hopefully), for U.S. businesses and consumers.
Here's the problem with Bessent's buyback plan: The Treasury bond market isn't buying it. Long-dated Treasury bond yields dropped at first when the buyback plan was announced, but have since climbed again. As of this writing, the 30-year Treasury yield is at 5.275%, its highest level in more than 15 years.
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