US Treasury Secretary Scott Bessent walks toward the White House annex after an interview Thursday, speaking to reporters. [EPA]
US Treasury Secretary Scott Bessent walks toward the White House annex after an interview Thursday, speaking to reporters. [EPA]

US Treasury Secretary Scott Bessent signaled that the government could expand its Treasury bond buyback operations to more than $4 billion per session.

Speaking on CNBC on Thursday, Bessent said the Treasury has "many policy tools available" and would monitor the situation. "Part of that is sending a signal to the market — to show that current Treasury yields are not properly reflecting underlying economic conditions," he said.

The remarks came after the Treasury announced Thursday that it would at least double the size of its long-term bond buyback operations, raising the per-session amount from $2 billion to a minimum of $4 billion.

The expanded buybacks are set to begin Sept. 9 and will target long-dated Treasuries in the 10-to-20-year and 20-to-30-year maturity ranges.

The Treasury's bond buyback program involves repurchasing outstanding government bonds from the market. It is designed to support the smooth functioning of the Treasury market by boosting liquidity and trading activity in specific maturity segments.

The 30-year Treasury yield fell sharply immediately after the announcement but quickly reversed most of those losses. Yields continued to climb even after Bessent's remarks.

Bessent brushed off the rebound in yields, saying "everything that happens within a 24-hour period is just noise."

He also previewed that the administration would make an announcement "this week or early next week" focused more on fiscal consolidation.

On the national debt surpassing $40 trillion for the first time in history, Bessent said the figure itself carries no special significance. "We can grow our way out of this," he said.

He added that "the message to our allies and trading partners is that global growth is the way to deal with this mountain of debt."

Bessent also appeared to suggest that AI companies — cited as another factor driving up long-term yields through large-scale corporate bond issuance — consider shifting toward medium-term bonds such as five-year notes rather than high-rate long-dated debt.

He said companies "believe the returns from building AI infrastructure will be very high" and are therefore not particularly concerned about the elevated borrowing costs they currently face.

"If I were a CFO, I would think about issuing more of what I'd call 'belly bonds' — the middle of the yield curve, say five-year bonds," he said.

Bessent said that if AI delivers significant productivity gains, inflationary pressures would naturally ease and interest rates would fall. "In the short term, it is creating a race for capital, but ultimately it will bring real productivity improvements," he said.


mokiya@heraldcorp.com