{"id":3569,"date":"2026-08-20T17:33:21","date_gmt":"2026-08-20T17:33:21","guid":{"rendered":"https:\/\/trusteconomics.eu\/?p=3569"},"modified":"2026-08-20T17:33:21","modified_gmt":"2026-08-20T17:33:21","slug":"massive-repurchase-of-long-term-debt-by-america","status":"publish","type":"post","link":"https:\/\/trusteconomics.eu\/index.php\/2026\/08\/20\/massive-repurchase-of-long-term-debt-by-america\/","title":{"rendered":"Massive repurchase of long-term debt by America"},"content":{"rendered":"\r\n\r\nThe U.S. Treasury Department is expanding its long-term debt repurchase program, sending bond yields lower. The announcement comes at a time when markets are closely watching the management of the public debt and moves in government issuance.\r\n\r\n \r\n\r\nThe increase in the scale of the repurchase signals a more aggressive approach to managing the government\u2019s long-term liabilities.\r\n\r\n \r\n\r\nThe market reaction was immediate, with yields falling as investors weigh the impact of the move on the demand and supply of government securities. The key question now is whether the intervention will be a simple technical debt management move or the first step in a broader strategy to reduce the government\u2019s financing costs.\r\n\r\n \r\n

More than doubles Treasury bond buybacks<\/strong><\/p>\r\n \r\n\r\nSpecifically, the U.S. Treasury announced on Wednesday that it would more than double the size of its Treasury bond buybacks, in a move that has led to a sharp decline in yields at a time when the market is under intense pressure.\r\n\r\n \r\n\r\nWith the fixed-income market under intense pressure and yields having surged to levels not seen in nearly two decades, the Treasury\u2019s decision focuses on the most vulnerable segment of the market, that of longer-dated bonds.\r\n\r\n \r\n\r\nAs part of the acceleration of the repurchase program, the Treasury, under Secretary Scott Bessent, will focus on securities with maturities of 10 to 20 years and 20 to 30 years, where demand from buyers has declined since late June.\r\n\r\n \r\n\r\nAccording to the Treasury Department, the government will \u201cat least double\u201d the maximum amount of repurchases, increasing it from $2 billion to at least $4 billion.\r\n\r\n \r\n

A crash is coming<\/strong><\/p>\r\n \r\n\r\nThe US public debt is heading towards $40 trillion, which makes the \u201cbuy everything but bonds\u201d strategy increasingly relevant.\r\n\r\n \r\n\r\nThe US is accumulating too much debt, which is forcing the government to issue more and more bonds.\r\n\r\n \r\n\r\nInvestors, in order to take on the increasing fiscal risk, are demanding higher compensation, making long-term US government bonds less attractive compared to other investment categories.\r\n\r\n \r\n

US debt at $39.9 trillion<\/strong><\/p>\r\n \r\n\r\nThe US public debt stood at approximately $39.9 trillion in mid-August and is expected to surpass the $40 trillion mark this week.\r\n\r\n \r\n\r\nAccording to official data from the US Treasury Department, the total government debt includes both obligations held by government entities and debt held by individuals and investors.\r\n\r\n \r\n\r\nInvestors should be particularly wary of long-term government bonds as the US continues to run large budget deficits and markets demand higher yields to finance US debt.\r\n\r\n \r\n\r\nThe US public debt could reach $50 trillion by the end of the year. dollars by 2029.\r\n\r\n \r\n

The problem is not just the size of the debt<\/strong><\/p>\r\n \r\n\r\nThe main concern is not just that the US government owes huge amounts of money. The critical issue is that the government must constantly refinance existing debt and issue new bonds.\r\n\r\n \r\n\r\nThis creates an ever-increasing supply of securities that investors must absorb. If investors become less willing to buy US debt at current yields, then the US Treasury will have to offer higher interest rates to attract buyers.\r\n\r\n \r\n\r\nThis creates a vicious cycle: more debt, more bond issues, higher yields, and ultimately even higher debt service costs.\r\n\r\n \r\n

10-year yield at 4.6% \u2013 30-year at 5.2%<\/strong><\/p>\r\n \r\n\r\nThis momentum is already visible in the US Treasury market. The 10-year US Treasury yield reached 4.6%, while the 30-year yield touched 5.2%.\r\n\r\n \r\n\r\nThe high yields reflect investor concerns about inflation, fiscal sustainability and the huge amount of new government borrowing.\r\n\r\n \r\n\r\nFor bond investors, however, rising yields are a double-edged sword. New bonds become more attractive, as they offer higher income. At the same time, however, existing bonds lose value when market yields rise.\r\n\r\n \r\n\r\nThe longer the duration of a bond, the more sensitive its price is usually to changes in interest rates. This makes long-term US government bonds particularly vulnerable if investors continue to demand higher yields to offset fiscal and inflationary risks.\r\n\r\n \r\n

Bonds as a \u201cthermometer\u201d of the US economy<\/strong><\/p>\r\n \r\n\r\nThe government debt market remains one of the clearest indicators of the underlying state of the economy.\r\n\r\n \r\n\r\nUS government bond yields reflect investors\u2019 assessments of inflation, economic growth, interest rates, and the government\u2019s ability to manage its public finances.\r\n\r\n \r\n\r\nWhen yields rise, the impact goes far beyond bond portfolios. US government bond yields act as a benchmark for the cost of borrowing across the economy.\r\n\r\n \r\n\r\nAs a result, higher yields can translate into more expensive mortgages, higher corporate borrowing costs, and more expensive consumer credit, potentially weighing on investment, housing, and consumption.\r\n\r\n \r\n

$1.8 trillion in new borrowing in 10 months<\/strong><\/p>\r\n \r\n\r\nThe scale of the problem is also reflected in the new borrowing. The U.S. federal government has borrowed about $1.8 trillion in the first 10 months of fiscal year 2026, including $432 billion in July alone.\r\n\r\n \r\n\r\nThe new borrowing creates a vicious cycle. More debt means higher interest payments, and higher interest payments can lead to even larger budget deficits.\r\n\r\n \r\n\r\nUltimately, the U.S. Treasury is forced to issue even more securities to meet its financing needs. And the scale is already enormous.\r\n\r\n","protected":false},"excerpt":{"rendered":"

The U.S. Treasury Department is expanding its long-term debt repurchase program, sending bond yields lower. The announcement comes at a time when markets are closely watching the management of the public debt and moves in government issuance. The increase in the scale of the repurchase signals a more aggressive approach to managing the government\u2019s long-term … <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[105,59,106],"tags":[138,141,29],"class_list":["post-3569","post","type-post","status-publish","format-standard","hentry","category-developed-economies","category-proposed-fiscal-policies","category-us","tag-bonds","tag-usa","tag-yields"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t