Treasury doubles long-end buyback cap to $4 billion

The U.S. Treasury will raise the maximum size of its liquidity-support buyback operations for older long-term Treasuries to at least $4 billion per operation beginning Sept. 9. The change runs through the current refunding quarter ending Nov. 4 and applies to the 10- to 20-year and 20- to 30-year sectors. Markets reacted with lower long-term yields and gains in U.S. stocks, bitcoin and gold.

The Treasury cited ‘consistently strong participation in the longer-dated operations’ and said an updated buyback schedule will be released later. Officials plan to provide further details at the Quarterly Refunding announcement on Nov. 4, when they will decide whether to continue, expand or reduce the larger capacity.

The program targets off-the-run securities, which are older notes and bonds issued before current benchmark issues, to improve liquidity in the secondary market. Regular buybacks resumed in May 2024 after a pause. Cash-management purchases focus on short-term paper, while liquidity-support buybacks buy eligible older securities from dealers and other holders and then retire them.

The department will not purchase newly issued benchmark bonds, securities used for delivery into Treasury futures contracts, or notes that are especially scarce in the repo market. The Treasury remains a price-sensitive buyer and can accept less than the stated maximum when submitted offers are unattractive.

Long-term yields had risen sharply in recent sessions. The 30-year yield recently topped 5.33%, its highest since 2007, and the 10-year rose amid heavy government borrowing, fiscal concerns and geopolitical tensions in the Middle East. After the buyback cap was increased, the 10-year yield fell about 6 basis points to roughly 4.647% and the 30-year dropped about 9 basis points to around 5.196%.

Equity and crypto markets moved immediately. The Nasdaq reached about 26,315.74 in morning trading while the S&P 500 and Dow also posted gains. Bitcoin tested the $65,000 level after reclaiming the $62,000–$63,000 zone; inflows into U.S. spot bitcoin ETFs and short covering in derivatives markets supported the rebound. Gold found support as yields softened.

Some market participants described the expanded buybacks as ‘mini QE,’ noting the operations increase Treasury demand for older long-dated securities. Treasury officials described the program as a market-function tool and reiterated that the department continues to issue new securities to fund government operations.

Investors will watch dealer offer quality, the path of long-term yields and Treasury’s Nov. 4 refunding announcement to determine whether the $4 billion per-operation cap will be maintained or adjusted.