U.S. Treasury Secretary Scott Bessent announced plans to double long-duration bond buybacks to at least $4 billion per operation, seeking to calm surging yields as the national debt surpassed $40 trillion and global markets reacted to escalating tensions with Iran.
The U.S. Treasury stepped into the fixed-income market to staunch an upward march in borrowing costs that has unnerved global investors after a major bond selloff pushed the 30-year Treasury yield to its highest level since 2007. Total public debt outstanding topped the $40 trillion mark on Wednesday, amplifying fiscal pressures as annual interest payments on the national debt are projected to exceed $1 trillion this year.
Treasury Secretary Scott Bessent signaled that the debt reduction effort could expand even further than the $4 billion that was announced. Speaking to CNBC, Bessent said the administration intends to make a market
in longer-dated securities where yields have climbed as part of signaling to show that the Treasury believes yields don’t reflect the underlying fundamentals.
Treasury Buyback Expansion and Market Mechanics
The Treasury will double buyback sizes for 10- to 30-year Treasury debt securities to at least $4 billion per operation. This increase from the previously planned $2 billion buybacks will apply to the 10-year to 20-year sector and the 20-year to 30-year sector and will be effective September 9 through November 4. The Department of the Treasury stated that the move reflects a desire to provide greater liquidity support in longer-dated nominal sectors where market participants consistently offer high-quality volume.
Dan Gottlander, global head of USD and CAD swaps trading at Citi, noted that while the policy will have a huge impact on the long end, it ultimately does not alter federal deficits. Gottlander suggested the Treasury may issue more bills, or also in the five-year to 10-year sector to compensate for the repurchases.
“This is not the cure to what ails the bond market. There are structural forces here at play that are really beyond the Treasury and the administration’s control.”
Adam Phillips, managing director of investments at EP Wealth Advisors, via CNBC
Phillips added that past interventions have generally provided only short-lived relief, stating that authorities are going to need to come at it with a little bit more force if it’s going to have staying power. Similarly, Evercore ISI analysts described Bessent as an activist Treasury secretary hitting bond shorts with a surprise announcement, while questioning whether the program can outlast a tidal wave of maturing debt.
Equities Slide as Geopolitical Tensions Lift Oil Prices
Wall Street equities dropped sharply on Thursday as higher borrowing costs and geopolitical friction weighed on investor sentiment.
Equities also faced pressure from rising oil prices driven by mounting tensions between the United States and Iran. President Donald Trump announced via social media that the U.S. would implement the MOST CRUSHING ECONOMIC OPERATION EVER TAKEN AGAINST ANY COUNTRY!
accompanied by what Bessent described in a CNBC interview as the toughest sanctions in history
against Tehran.
Global crude benchmarks advanced rapidly in response. West Texas Intermediate crude futures for October delivery rose 2% to trade above $86 per barrel, while Brent crude futures climbed to above $93 per barrel following the administration’s announcements.
Fiscal Realities and Looming Debt Ceiling Pressures
Beyond immediate market reactions, structural federal obligations continue to draw scrutiny from budget analysts. Interest expenses already consume about 19% of federal revenue, according to data from the Peter G. Peterson Foundation, and that share is projected to rise to 26% by 2036 if current borrowing trajectories persist.
The accelerated pace of national borrowing is also bringing Washington closer to a statutory limit confrontation. Although Congress raised the legal borrowing limit to $41.1 trillion last year, preliminary projections from the Bipartisan Policy Center indicate the federal government could reach that ceiling between late winter and midsummer 2027.
