The U.S. Treasury announced today that it will at least double the size of its liquidity-support buyback operations for longer-dated Treasury securities, increasing the maximum purchase from $2 billion to at least $4 billion per operation. The change will apply beginning September 9, 2026.
The announcement comes at a time when long-dated Treasury yields have been under heavy upward pressure, with investors demanding higher compensation for fiscal, inflation and supply risks. The Treasury’s move provides additional demand precisely in the part of the curve facing the greatest pressure.
As a reminder, the US 30-year bond yield recently rose to the highest level since 2007 and it attracted lots of market attention. The bond market has been tightening financial conditions and this move from the US Treasury acts kind of like a “mini QE”.
The reaction in the markets was exactly what you would expect from an easing in financial conditions: long-dated yields fell, the US dollar dropped, gold and equities rallied.
My two cents is that this is a dangerous move, as it could prompt markets to expect more “intervention” in the future, at the expense of higher inflation (all else being equal). This is especially negative for the US dollar and positive for gold and silver.
This article was written by Giuseppe Dellamotta at investinglive.com.