Bessent doubles long-term Treasury buys to curb yields

Treasury officials announced the regular purchases of 10- to 30-year Treasuries will double from about $2 billion to at least $4 billion beginning Sept. 9. The increase targets longer-dated government bonds to support liquidity and trading in older securities.

The announcement led to an initial drop in 10- and 30-year Treasury yields, but yields reversed higher in subsequent sessions. The expanded program raises the Treasury’s presence at the long end of the curve, where trading has been thin, especially in the 30-year sector.

Scott Bessent highlighted several factors that he said pushed yields above what fundamentals would suggest, pointing to geopolitical tensions related to Iran and strained liquidity in long-dated issues. He also indicated the administration expects to announce measures aimed at strengthening fiscal discipline soon and suggested the U.S. may be near the peak of its government deficits.

Some market participants described the program as an insufficient response to fiscal pressures. Charlie McElligott of Nomura described the expanded purchases as “a band-aid on a bullet hole,” arguing the steps would not overcome forces driving yields higher. Other investors pointed to concerns over fiscal deterioration, persistent inflation and heavy corporate borrowing by technology companies to fund artificial intelligence infrastructure.

The Congressional Budget Office projects the federal budget deficit will equal roughly 5.8% of GDP this year, little changed from 2025 and above the Treasury’s stated goal of about 3% of GDP by 2028. Federal debt is approaching $40 trillion.

Markets and analysts are divided on the likely impact of the expanded buying program. Some investors and dealers view the purchases as meant to prevent disorderly market moves and to shore up trading conditions rather than to permanently reverse an upward trend in yields. Other market participants argued that durable declines in long-term borrowing costs would require changes in monetary and fiscal fundamentals.

Since taking office, Bessent has adopted a more interventionist posture than some predecessors, publicly weighing in on currency moves, commodity dynamics and government debt markets. The expanded purchases, which begin Sept. 9, will test whether tactical Treasury actions can stabilize long-term yields while broader fiscal adjustments are developed.