Bessent: Bond buyback expansion meant to cool overheated market

US Treasury Secretary Scott Bessent said the expanded bond buyback program announced in August is meant to cool overheating in the bond market.

According to Bloomberg, Bessent made the remarks Tuesday (local time) during a question-and-answer session at an event in Washington, D.C., saying, "My role is to push the market back into balance. I don't think I can change the equilibrium price, but there's no such thing as a perfect balance in the world."

The remarks came a day before the Treasury's first purchase under the expanded long-term bond buyback program it had announced.

Earlier, the yield on 30-year US Treasury bonds had surged to its highest level since 2007.

Drawing on his background as a former hedge fund manager, Bessent said, "Heat was building up in the market. When you're speculating in financial markets, you want to accelerate things further." He also rebuffed the view that rising US Treasury yields reflect concerns over the size of the federal government's debt, saying, "If everyone was worried about America's credit, they would have sold Treasurys and bought German government bonds, but it's the opposite. We are delivering the best performance."

Bessent also pushed back against criticism that the Treasury's bond buyback amounts to a form of quantitative easing, the bond-purchase program the Federal Reserve has often used to stimulate the economy. "I am not doing quantitative easing," he said. "It is closer to the Treasury's version of Operation Twist, in which the Fed previously sold short-term Treasurys and used the proceeds to buy long-term ones."

The Treasury is set to announce Wednesday the size of its purchases of bonds with 10- to 20-year maturities. This will be the first official announcement since the department roiled markets last month by declaring it would "at least double" the $2 billion buyback size.

Bessent has kept the exact figure under wraps, but the market expects it to exceed $4 billion.