Scott Bessent Ups The Ante With Accelerated Buybacks Of Treasury Bonds After Yields Rebound

Treasury Secretary Scott Bessent said the accelerated buyback of government debt could be higher than the $4 billion announced on Wednesday after yields rebounded and erased the drop seen after the announcement.

Speaking to CNBC, Bessent said the Treasury Department is going to "make a market" in longer-dated securities where yields have been climbing. "I would note that it could be more than the 4 billion per issue," he added.

The official did acknowledge pressure on longer-dated yields but claimed their levels don't reflect current economic conditions. Part of it is signaling here and to show that we believe that the yields don't reflect the underlying fundamentals," Bessent said. Yields edged down following the remarks, the outlet said.

The Department of the Treasury's move will specifically target the 10-to20-year and 20-to-30 year portion of the market, which had practically not seen buyers since late June.

"This increase in buyback operation sizes reflects Treasury's desire to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants, as evidenced by the significant volume of high-quality offers Treasury routinely receives in longer-dated buyback operations," the department said on Wednesday.

Yields had dropped significantly, but rebounded quickly. It comes on the same day the U.S. national debt hit $40 trillion. The numbers have moved quickly. Just six months ago, the nonpartisan Congressional Budget Office projected federal borrowing would reach about $39.4 trillion by the end of the fiscal year.

Annual interest payments on the national debt are projected to exceed $1 trillion this year, according to the CBO, putting them roughly on par with the size of the Pentagon's budget.

Interest expenses already consume about 19% of federal revenue, according to the Peter G. Peterson Foundation. That share is projected to rise to 26% by 2036 if current trends continue. The faster pace of borrowing is also bringing Washington closer to another politically explosive debt ceiling fight. Congress raised the legal borrowing limit to $41.1 trillion last year.

Preliminary projections from the Bipartisan Policy Center indicate the government could reach that limit between late winter and midsummer 2027, with the latest borrowing figures pushing expectations toward the earlier part of that range.