Treasury Secretary Scott Bessent indicated that the debt repurchase program unveiled on Wednesday could ultimately exceed the announced $40 billion threshold in operational scale. He noted during an interview that current yields do not accurately reflect market fundamentals, with liquidity in the 30-year Treasury segment proving particularly weak. Treasury yields briefly dipped during his remarks before resuming their upward trajectory.
In a live-streamed conversation on Thursday, Secretary Bessent stated that the accelerated government debt buyback initiative could surpass the previously disclosed $40 billion figure. He characterized the Treasury's role as "market-making" for long-dated bonds that have experienced a recent surge in yields. The department announced an expansion of its long-term Treasury repurchase operations on Wednesday, a move that initially triggered a significant decline in yields across the curve.
"We will scale up the repurchase program," Bessent said. "To be clear, individual auction batches could exceed $40 billion." His comments put temporary downward pressure on yields, though the relief from Wednesday's announcement had largely faded by that point. The 30-year long bond was last trading at a yield of approximately 5.235%, a level recently touching highs not seen since before the 2008 global financial crisis.
The benchmark 10-year Treasury yield also experienced a brief decline during Bessent's remarks before moving higher again, last trading up roughly 5 basis points at 4.704%. A basis point represents 0.01%. The Treasury Secretary emphasized that yield levels are not a determining factor in buyback decisions, expressing a preference for market movements driven by underlying fundamentals.
While acknowledging the possibility of further expansion in the buyback program, Bessent declined to provide a specific figure, stating that the scale would depend on prevailing market conditions. "We will assess the market environment and make judgments accordingly," he said. "Our goal is simply to encourage market participants to return to fundamentals rather than trading solely on headline news during a season of thin liquidity."
Bessent acknowledged the pressure on long-end yields, noting that current trading levels do not align with the realities of the economic situation. "We possess a diverse set of policy tools, and we will adapt as circumstances warrant. Part of this action is intended to signal that we believe current yields are not reflecting the underlying fundamentals." He also described liquidity in the 30-year Treasury as "very poor," which served as an additional motivation for the Treasury to intervene in what should be a highly active market.
A confluence of factors has been pushing Treasury yields higher: the dramatic increase in U.S. debt and deficit levels; competition from corporate bond issuance, particularly from AI-related enterprises; rising yields on sovereign bonds from other nations such as Japan; and a higher term premium, which represents the additional compensation investors demand for holding government debt over longer periods.
On the fiscal front, Bessent stated he would meet with Russell Vought, Director of the Office of Management and Budget, to discuss "fiscal consolidation." Treasury data released Wednesday showed U.S. government debt surpassing the $40 trillion milestone this week. "The $40 trillion figure holds no special magic; we can grow our way out of the debt challenge," Bessent remarked. He added, "The message we convey to allies and trading partners is that global economic growth represents the pathway to resolving this mountain of debt."