The US Treasury just doubled down on its bond buyback program. JPMorgan thinks that’s exactly the wrong move.
JPMorgan strategists responded with what amounts to a polite “this won’t work.” The bank warned the buyback blitz may actually push yields higher, the precise opposite of what the Treasury intends.
The market’s split-second optimism
The initial reaction to the announcement looked promising. Ten-year Treasury yields fell 5.7 basis points to 4.647%, while 30-year yields dropped 9 basis points to 5.196%.
Then yields started climbing again. JPMorgan’s strategists pointed to this reversal as evidence that the underlying dynamics in the bond market are simply too powerful for buybacks to overcome.
