US Treasury doubles bond buybacks as national debt crosses $40 trillion for the first time

The US national debt just crossed $40 trillion. Treasury Secretary Scott Bessent announced on August 19 that the department would increase its liquidity-support buybacks of longer-dated securities from $2 billion to at least $4 billion per operation, effective September 9 through November 4. The goal: soak up less actively traded long bonds and take some pressure off yields that had been screaming higher. The yield problem nobody can buyback away The 30-year Treasury yield had surged to approximately 5.33% before the announcement, its highest level since 2007. That’s not just a number on a Bloomberg terminal. It ripples through mortgage rates, corporate borrowing costs, and virtually every corner of the economy where someone needs to borrow money. Markets initially responded the way the Treasury hoped. Yields dipped on the news. Then they un-dipped. Mohamed El-Erian described the move as a “band-aid,” a characterization that stuck because it captured what many market participants were thinking. Buying back bonds addresses the symptom, not the disease. The disease, in this case, is a federal budget deficit running at roughly $2 trillion per year, or about 6.4% of GDP. That’s the kin...