US Treasuries extended their decline after the repurchase announcement, with the market viewing the $6 billion cap as insufficient.

The U.S. Treasury Department said it will purchase between $40 billion and $60 billion in long-term government debt in the first operation of its expanded repurchase program, demonstrating Secretary Bessent’s resolve to curb the recent rise in borrowing costs. U.S. Treasuries extended their earlier decline following the announcement, indicating the program’s size fell short of some investors’ expectations. The success of the expanded purchase program remains to be seen. After the program was first announced last month, yields fell before rebounding later. The benchmark 10-year yield hit its highest level since 2023 last week. Economist Guha, a former staffer at the New York Fed, noted: “The challenge always lies in whether the impact of these interventions can persist without larger fundamental changes.” Moreover, the maximum size of the repurchase operation does not mean the Treasury will necessarily purchase that amount of Treasuries. However, in repurchases targeting long-term nominal debt, the department typically buys the full amount; since the program was relaunched in 2024, it has only failed to do so in two of 52 such operations. (Jinshi)