The U.S. Treasury Department announced it will maintain steady auction sizes for longer-term notes and bonds during the next several quarters and boost debt buyback operations to improve market liquidity.
The Treasury Department announced in its August-to-October refunding update that it will sell $125 billion worth of securities including $58 billion in 3-year notes and $42 billion in 10-year notes and $25 billion in 30-year bonds at the same levels as February. The Treasury Department will boost long-end buybacks through four quarterly transactions and increase its total liquidity buyback program from $30 billion to $38 billion.
The Treasury officials stated that Treasury bills serve as the primary mechanism to absorb unexpected borrowing requirements because of their adaptable nature. The plan includes gradual TIPS and short-term bill increases as part of its strategy.
The announcement from TD Securities analyst Gennadiy Goldberg received a “mildly positive” assessment for long-dated bonds. The market experienced initial yield decreases before GDP data revealed 3% annualized Q2 growth which caused yields to rise throughout the session.
Through this policy adjustment the Treasury seeks to optimize supply management while maintaining market stability and liquidity support for longer-term maturities. The policy adjustment occurs at a time when debt markets need to adapt to changing rate expectations while investors seek inflation protection.
