The market immediately recognized the Treasury buyback as an attempt to manipulate prices rather than manage liquidity.
“By the next afternoon they had round-tripped to levels above where they started. The market's verdict was swift and correct: This wasn't liquidity management, it was price management.”
Bessent criticizes the Treasury buyback program as price manipulation rather than legitimate liquidity management.
“The market’s verdict was swift and correct: This wasn’t liquidity management, it was price management — and a mistake far larger than $4 billion suggests.”
A genuine fiscal reform plan would lower long-term yields far more effectively than any buyback program.
“A credible fiscal package would do more for the long end of the curve than a buyback program 1,000 times this size.”
Treasury buybacks should be limited to small scheduled operations for illiquid bonds, never emergency responses to rising yields.
“Return buybacks to their stated purpose: small, scheduled, off-the-run liquidity operations announced at quarterly refundings, never off-cycle responses to yield levels. Term out the debt honestly and pay the price the market sets,”