On August 19, the US Treasury decided to at least double its buybacks of 10-30 year securities, moving from $2 billion to at least $4 billion per operation, running from September 9 through November 4.
Washington wants to be reassuring: no panic, no shortage of buyers. Officially, this is liquidity support — a buyback program for “off-the-run” securities, older issues that have become less liquid on the secondary market. Nothing new under the sun: the practice has existed for two years already.
Except that doubling an unscheduled intervention doesn’t happen on a whim. And the context itself is reassuring no one: US public debt has now climbed to $40.047 trillion — including $32.266 trillion in Treasury bonds and $7.782 trillion in intragovernmental debt — a dizzying figure that makes every technical Treasury adjustment immediately scrutinized as a potential sign of underlying strain.
Officially, then, this has nothing to do with a balking market. But in a context of record debt, even what’s presented as routine ends up looking like an admission. The United States is buying back its long-term debt with short-term debt in order to push down yields on the former, easing the future burden of servicing it.
We won’t dwell on Donald Trump, who, going off-script, declared yesterday: “Leave us alone. We could have a GDP ten times higher with lower interest rates. Leave us alone. Lower the interest rate.” It’s precisely because buyers are “leaving alone” American debt that its yields are soaring.
