Yields on long-term U.S. bonds fell midweek after the Treasury Department said it would expand long-end debt buybacks amid climbing rates.
From Sept. 9, the Treasury will double the size of its government debt repurchases to $4 billion, focusing its buyback operations on 10- to 20-year and 20- to 30-year bonds.
A Treasury buyback is when the federal government purchases its own bonds before they mature, retiring older securities and replacing them with new issuance.
Increasing buyback operation sizes indicate the Treasury’s commitment to offer more liquidity support amid consistent and robust demand from investors, “as evidenced by the significant volume of high-quality offers Treasury routinely receives in longer-dated buyback operations,” the department said in an Aug. 19 statement.
The Treasury will provide additional information in November’s quarterly refunding estimate.
Over the past year, the Treasury has been engaged in a record debt buyback initiative. An Epoch Times review last month found that the U.S. government repurchased almost $200 billion in debt in the first half of 2026.
Long-term interest rates declined following the announcement.
The benchmark 10-year yield, which influences business and consumer borrowing costs, fell below 4.7 percent. The 20- and 30-year yields also eased to 5.2 percent.
On Aug. 17, the 30-year Treasury yield topped 5.31 percent, the highest since June 2007.
Hungry for Yield
Global bond yields have also come under pressure this year. Japan’s 10-year bond yield is at a three-decade high. Germany’s 30-year yield climbed to the highest level since 2011. France’s 30-year yield also reached an 18-year high.
A broad array of factors has pushed up yields, including persistent war-driven inflation fears, fiscal worries, potential monetary policy tightening, and competition from artificial intelligence-related corporate bonds.
“A prolonged war means pressure on inflation via energy prices at a time when the Fed’s policy outlook and its reaction function to inflation are no longer straightforward, putting upward pressure on longer-maturity US yields,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in an emailed note to The Epoch Times.
“Something must give: either yields will come lower – if Middle East tensions ease, for example – or stock valuations will readjust.”
U.S. stocks reacted favorably to the Treasury move, with the leading benchmark index averages up around 0.4 percent.
The U.S. Dollar Index—a measure of the greenback against a weighted basket of currencies—continued its weakness in the middle of the trading week. The index slumped more than 0.5 percent and pared its year-to-date gain to below 1 percent.
Printing Supervisor Donavan Elliott inspects newly printed sheets of one-dollar bills at the Bureau of Engraving and Printing in Washington on March 24, 2015. Mark Wilson/Getty Images
Despite concerns that higher bond yields will push investors away from stocks, the 1990s proved that they can “coexist,” Laffer Tengler Investments CEO Nancy Tengler told The Epoch Times in an emailed note.
“As I have pointed out ad nauseum for years now, the 1990s proved higher yields can coexist with robust stock price performance,” Tengler said.
The recent movements could reflect the Federal Reserve’s removal of forward guidance and investors repricing Treasury securities, she added.
“What you are hearing from Wall Street is a real-time whine fest that the Fed is taking away guidance (similar to Greenspan’s Fed, which left bond managers to do the work and manage the risk in their portfolios themselves),” Tengler said. “When the market finally does correct, we will likely blame negative earnings or a recession, not the Fed holding pat on rates with the 10-year well below 5.0%.”
Under Chairman Kevin Warsh, the Federal Reserve has pulled back on forward guidance, meaning the central bank will not signal to financial markets which policy decisions it plans to make. The objective behind this thinking is to allow the financial markets to move without handholding by the Fed.
The Fed will release minutes from the July Federal Open Market Committee meeting later on Aug. 19.
