Treasury doubles debt buybacks as long-term yields drop

Long-term U.S. Treasury yields fell sharply Wednesday after the Treasury Department unexpectedly said it would at least double planned buybacks of government debt, a move aimed at adding support to a bond market rattled by inflation worries and rising borrowing costs.

The 30-year Treasury yield dropped from 5.26% to as low as 5.18% after the announcement, according to NBC News. The 10-year yield, a key benchmark for consumer borrowing costs including mortgages, fell from 4.68% to 4.64%. U.S. stocks also opened slightly higher, with the S&P 500 up 0.4% and the Nasdaq Composite up 0.3%.

The Treasury said the change “reflects Treasury’s desire to provide greater liquidity support” to the long-term bond market. The new schedule takes effect Sept. 9 and abruptly revises a tentative buyback plan released two weeks earlier, NBC News reported.

By increasing buybacks, the Treasury becomes a larger buyer of longer-term bonds, which have been selling off. Bond prices and yields move in opposite directions, so the selloff has pushed yields higher. Earlier this week, the 30-year Treasury yield reached its highest level since 2007. The Guardian reported that yields on 10-year, 20-year and 30-year Treasury notes all hit 20-year highs this week.

The rise has added pressure for borrowers because major loans, including mortgages, are tied to Treasury rates. It has also raised concern about the federal government’s interest costs on the national debt.

The move comes as inflation remains elevated during the volatile war with Iran. The Guardian reported that new data last week showed the annualized U.S. inflation rate was 3.4% in July, down from a three-year high of 4.2% in May but nearly 1 percentage point higher than 2025 rates. Oil prices have fallen from their March peak but remain above prewar levels, and AAA said this month’s oil prices are on track to be the highest ever recorded for August, with gasoline at $4.08 a gallon, about $1 more than a year ago.

Investors also appeared unsettled after a two-month ceasefire between the U.S. and Iran expired Monday with no resolution, The Guardian reported. On Tuesday, Donald Trump said no peace talks were scheduled between the U.S. and Iran, and earlier in the week he threatened to bomb Oman if it “gets in the way” of the U.S. in the conflict, according to The Guardian.

The Treasury announcement follows another intervention involving the Japanese yen. NBC News reported that the Treasury, working with Japan’s finance ministry, sold euros and used the proceeds to buy yen, rather than using dollars. The move reportedly surprised the European Central Bank and may have been intended to discourage Japan, a major holder of U.S. Treasuries, from selling bonds and driving yields higher.

Some market watchers questioned whether Wednesday’s action would have a lasting effect. “The market reaction suggests that this is an important tactical move from the Treasury,” Jim Bullard, former president of the Federal Reserve Bank of St. Louis, said on Bloomberg TV. “A little bit unexpected.”

“I don’t think it changes the fundamentals of big fiscal deficits and a Fed on the sidelines,” Bullard added, “which is what’s driving longer-term yields higher.”

Economist Mohamed El-Erian wrote on X that the move could lower mortgage rates in the “short term,” but “risks collateral damage and unintended consequences.” He added: “The effects of this financial engineering are short dated unless followed by fundamental policy adjustments.”

Peter Boockvar of One Point BFG Wealth also cautioned against reading the buybacks as a reduction in federal debt. “This is NOT a debt paydown,” he said. “It is just a rearrangement of the maturity schedule of Treasuries.”