Treasury Secretary Scott Bessent has ramped up a multibillion dollar buyback program for long dated Treasury bonds as 30 year yields climbed toward their highest levels in 20 years. The Treasury increased the size of its repurchase operations from $2 billion to $4 billion per transaction, a move that reduces the supply of bonds in the market and tends to push yields lower.
Bessent has described the effort as liquidity management, or what he calls market plumbing, arguing it addresses inefficiencies in the bond market rather than an attempt to steer prices. The buyback program itself is not new, having first been introduced in May 2024, but the size of individual operations has now doubled.
The move comes as the national debt has climbed to $40 trillion, with interest payments on Treasury debt expected to exceed $2 trillion in fiscal 2026. Japan remains the largest foreign holder of American government debt.
Not everyone is convinced. Stan Druckenmiller, an investor and mentor to Bessent, has criticized the move, arguing that a credible package of fiscal reforms would do more to bring down yields than market intervention. Wharton professor Christina Parajon Skinner, who previously worked at the Treasury under Bessent, and Macquarie global FX and rates strategist Thierry Wizman have also questioned the timing, given the size of the debt and the administration's earlier intervention in the yen.
Some economists see another motive behind the move. With global AI investment expected to exceed $1 trillion in 2026, several have suggested the administration may be implicitly supporting the buildout of AI infrastructure by keeping government borrowing costs, and by extension broader borrowing costs, in check.
Columbia Business School professor Yiming Ma has warned that the intervention sets a risky precedent. If the Treasury steps in whenever yields rise, she said, market confidence could suffer badly the first time it fails to act during a future crisis, a dynamic she compared to how investors treat emerging market debt rather than the debt of a stable reserve currency.