Bessent's Bond Buyback Boost Fails to Hold as 10-Year Yield Rebounds

US Treasury Secretary Scott Bessent's surprise move to double the size of a federal bond buyback program to $4 billion per operation — from $2 billion — failed to calm long-term borrowing costs on Thursday, with the 10-year Treasury yield rebounding to 4.69%, the Associated Press reported. The benchmark yield rose back to nearly where it stood before Bessent unveiled the expanded repurchase program a day earlier, a sign that Wall Street remains unconvinced by Washington's effort to ease pressure on long-end borrowing.

The buybacks are designed to absorb the supply of 10-year to 30-year government bonds, lifting their prices and — by the inverse relationship between bond prices and yields — pulling interest rates lower. Speaking to CNBC on Thursday, Bessent signalled the program could grow further, saying "we have a big toolkit so we'll see" and that "we believe that the yields don't reflect the underlying fundamentals," AP reported. The 30-year bond yield stood at 5.23% on Thursday, down only slightly from a 19-year high reached earlier in the week, underscoring how entrenched the upward pressure on long-dated debt has become.

Investors are weighing three forces pushing yields higher: burgeoning US government debt, heavy borrowing by large technology companies to fund artificial-intelligence infrastructure, and persistent inflation tied in part to elevated crude oil prices since the US war with Iran began in late February. President Donald Trump has made lowering interest rates a top economic priority, AP noted, and Federal Reserve Chair Kevin Warsh faces a high-stakes audience on Friday at the Fed's annual symposium in Jackson Hole, Wyoming where he is expected to address concerns about his approach to inflation-fighting communication. The combination of higher Treasury yields and elevated mortgage rates — with the average 30-year home loan rate back at 6.66%, near this year's high of 6.69% — has slowed US home sales, adding to evidence that bond-market stress is filtering through to the real economy. Some analysts warn the Treasury intervention could even backfire if it is read as a sign of official concern about debt sustainability, AP reported.

**Sources:** Associated Press, kansascityfed.org