Investors warn Treasury debt strategy could raise US borrowing costs

JPMorgan, Jefferies and PGIM analysts say unpredictable buybacks may increase the premium investors demand to hold government debt.

Market participants are warning that unpredictable shifts in the US Treasury’s debt management strategy could ultimately raise government borrowing costs.

Investors and analysts at JPMorgan Chase, Jefferies and PGIM said surprises such as the Treasury’s decision this week to boost bond buybacks could increase the term premium on US government debt. The term premium is the extra compensation investors demand to offset potential risks.

The warning follows a move by Treasury Secretary Scott Bessent’s department to expand buybacks of longer-dated securities. Analysts said the change may unsettle investors who have relied on regular and predictable Treasury issuance.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.

Market participants are warning that unpredictable shifts in the US Treasury’s debt management strategy could ultimately raise government borrowing costs.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.