US Treasury Secretary Scott Bessent has taken a new step to bring down long-term US government bond yields. The Treasury said it will at least double the amount of long-term Treasury bonds it buys back. The buybacks will cover 10-year, 20-year and 30-year Treasury bonds.
The new operation will start on September 9 and continue through November 4, according to the Treasury. The move immediately pushed US government bond yields lower. But the bigger question is whether the Treasury can keep yields down for a long time. Wall Street experts say the answer may be no, because the main reasons behind high yields have not gone away, according to Yahoo Finance.
Why did the Treasury make this move now?
The decision comes after the 30-year US Treasury yield reached its highest level in 19 years earlier this week. Investors have been worried about several factors pushing borrowing costs higher. These include larger US government budget deficits, higher inflation and heavy borrowing by technology companies.
Tech companies are raising huge amounts of money to build data centers and expand their artificial intelligence businesses. This creates more competition for investor money that could otherwise go into US government bonds. The result is pressure on Treasury prices and higher bond yields.