The US Treasury has long prided itself on one core selling point to the world’s bond investors: we are boring and predictable. Former New York Fed President Bill Dudley thinks that reputation just took a hit.
In a Bloomberg Television interview during the week of August 20, Dudley took aim at the Treasury’s recent decision to ramp up buybacks of long-dated government debt, arguing the move breaks from the department’s traditional commitment to regular and predictable issuance. The intervention came after the 30-year Treasury yield surged above 5.3% in mid-August, its highest level since 2007, essentially forcing the government’s hand.
The buyback gambit
Treasury Secretary Scott Bessent announced plans to expand the long-bond buyback program to more than $4 billion, roughly double its previous size. The goal is straightforward: soak up some of the supply weighing on the long end of the yield curve and ease the pressure on borrowing costs that have been climbing relentlessly.
The awkward part is that the Treasury had just maintained steady quarterly refunding guidance as of early August, signaling no changes to auction sizes through 2027. Weeks later, it was doubling down on buybacks.
