Treasury bond intervention appears to lower long-term yields

Axios reports that 30-year and 10-year Treasury yields have declined since the government began buying back longer-term debt.

Treasury Department measures to support the bond market appear to be reducing long-term borrowing costs, Axios reported.

The 30-year Treasury yield reached a 19-year high of 5.31% on Aug. 17 before falling to 5.19% on Wednesday morning. The 10-year Treasury yield declined over the same period from 4.72% to 4.66%.

The moves followed the Treasury’s announcement that it would buy back at least $4 billion of longer-term securities at a time. The gap between Treasury yields and comparable interest-rate swaps has also narrowed, suggesting global investors are more willing to hold US government debt.

Treasury Secretary Scott Bessent has argued that targeted interventions can change trader behavior by making bets against long-term Treasuries riskier.

Citi rates strategist Jason Williams said the program provides a potential backstop for investors holding longer-term bonds. But investor Stan Druckenmiller warned that tactical liquidity measures cannot resolve the fiscal deficits underlying higher rates.

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