At 11:00 PM Beijing time tonight, the U.S. Treasury will announce the size of its long-term Treasury buyback operation, marking the first disclosure since the August 19 announcement that buybacks would "at least double." Market expectations point to a scale exceeding $4 billion; Morgan Stanley estimates an upper bound of approximately $10 billion, while Wrightson ICAP considers $5–6 billion a reasonable starting point. The announcement will be released just hours before the 10-year Treasury auction, and any deviation from market expectations—whether higher or lower—could trigger volatility.
The long-term Treasury buyback program led by U.S. Treasury Secretary Bessent reaches a critical juncture tonight.
The U.S. Treasury is expected to announce the specific scale of its bond buyback operations tonight, the first disclosure following the market-shocking August 19 statement that buybacks would "at least double." This will provide insight into the actual buyback volume the Treasury is willing to implement and how far Secretary Bessent is prepared to go.
According to Bloomberg, the announcement is scheduled for 11:00 AM Washington time on Wednesday, September 9 (11:00 PM Beijing time), covering outstanding Treasuries with maturities of 10 to 20 years, with implementation set for Thursday, September 10. The buyback announcement will be issued just hours before the 10-year Treasury auction, a sensitive timing where any surprise in scale—either above or below expectations—could spark market volatility.
Why did Bessent intervene?
In August, U.S. long-term Treasury yields surged sharply, with the 30-year yield briefly touching its highest level since 2007.
Bessent directly addressed the rationale for his intervention at an event at Southern Methodist University in Texas on Tuesday: "The market has developed a 'fever,' and I do not want the market to be driven by narratives."
He further explained that the prevailing narrative in August was that "the United States would be unable to service its debt," a claim he described as "absurd, yet it became the dominant narrative."
It was against this backdrop that the Treasury announced on August 19 that it would "at least double" the originally planned $2 billion buyback size. Released outside the regular quarterly announcement cycle, this move broke the Treasury's long-standing principle of "regularity and predictability," catching the market off guard.
The Debate Over Scale: $4 Billion, $6 Billion, or $10 Billion?
Regarding tonight’s announcement, the market has only one pressing question: What is the actual scale?
Bessent himself declined to disclose specific figures, but his public remarks have raised expectations in the market, with most participants believing the scale will exceed $4 billion.
Morgan Stanley estimates that the effective upper limit for a single operation is approximately $10 billion; beyond this level, funding sources—particularly cash in the Treasury General Account—would become a constraint.
Lou Crandall, senior economist at Wrightson ICAP, considers $5–6 billion a more reasonable starting point, though he acknowledges that a larger increase is not out of the question given the rapid shift in the Treasury’s strategy in recent weeks.
Crandall also pointed out that a significant increase in scale “would amount to an admission that the Treasury did not give careful consideration to its hasty statement on August 19.”
Barclays strategists Anshul Pradhan and Demi Hu propose another possibility: the Treasury might set the cap as an open-ended statement—“at least $4 billion per operation”—to retain flexibility, but this would also mean the market lacks a clear roadmap.
The impact of the scale is substantial. According to Wrightson ICAP’s calculations, raising the repurchase scale to $6 billion per operation would reduce the quarterly net issuance of Treasury bonds with maturities over 20 years by approximately 27%; increasing it to $10 billion would cut supply by about 55%.
With timing being sensitive, how will the market react?
The timing of this repurchase announcement is particularly delicate.
The repurchase announcement on Wednesday, September 9, will be released just hours before the Treasury’s 10-year note auction later that day, with a 30-year bond auction scheduled for Thursday. If the repurchase scale exceeds expectations, it could push down long-end yields in the short term; if it remains at merely $4 billion, it may disappoint the market and further intensify selling pressure.
Currently, the yield on 10-year Treasury bonds has risen above last month's level, approaching its 2023 peak.
Brendan Fagan, a macro strategist at Bloomberg, stated: “Traders are digesting the buyback size in real time. An operation larger than expected could be interpreted as a stronger signal from the Treasury, potentially pressuring long-end yields lower in the initial phase—although the nominal size of the plan remains small relative to the overall Treasury market. Swap spreads will provide clearer market feedback.”
Traders also generally believe that any surprises in the scale or pace of buybacks are more likely to be reflected first in 30-year swap spreads rather than direct yields, as spreads are more sensitive to changes in supply, while bond prices remain dominated by global macroeconomic factors.
Larger questions remain unresolved
Beyond the scale, the market is awaiting further information.
The August 19 statement mentioned that the updated provisional buyback plan “will be released at a later date,” but it has yet to appear. Furthermore, the source of funding for the buybacks remains unclear. The market generally assumes the Treasury will issue additional short-term bills (with maturities of no more than 12 months), though there is speculation that the Treasury might utilize cash balances in its General Account.
In light of last month’s sudden action, some investors expect the Treasury will not provide guidance beyond this specific buyback, continuing its case-by-case approach.