Bond yields rise after Treasury Department announces size of buyback operation
By John Towfighi, CNN
New York (CNN) — US bond yields rose Wednesday to their highest levels in almost three years after the Treasury Department said it would buy back up to $6 billion of government bonds, putting a dollar figure on the operation first announced last month.
The 10-year US Treasury yield rose to 4.85%, its highest level since 2023. If the 10-year yield ends the day above 4.82%, it would be the highest closing level since October 2023.
The Treasury Department on August 19 announced it would at least double the size of bond buybacks from September to November. The announcement on Wednesday pins the buybacks at up to $6 billion, triple the size of the standard $2 billion operation.
The operation aims to tame rising bond yields, which have climbed in recent weeks to multi-year highs. The buybacks, which target long-dated bonds like the 10-year, are set to take place on Thursday.
Bond yields have surged this year, raising the cost of borrowing and exacerbating concerns about affordability. Yields have climbed across the globe as investors reckon with surging energy prices and potential central bank rate hikes.
A deluge of corporate debt to fund the AI buildout is also pushing up yields. And in the backdrop, rising government deficits and concerns over fiscal health are adding to the bond market uncertainty.
Yields rise when bond prices fall. Investors are selling bonds, pushing prices lower and yields higher. The rise in yields is lifting borrowing costs for consumers and governments alike.
Treasury Secretary Scott Bessent is flexing the tools at his disposal at the Treasury Department to try and temper the rise in yields.
Buybacks from the Treasury Department are a standard operation in bond markets, but the size and timing of the announcement highlights the Trump administration’s sensitivity to the rise in yields.
While the buybacks can provide short-term relief, they don’t change the fundamentals contributing to higher yields, analysts say, from rising corporate debt issuance to lingering concerns about government deficits.
Yields moved higher after the Treasury announced the $6 billion figure, signaling some investor skepticism.
“Markets may be telegraphing to Bessent that it will be tough for him to have meaningful control over long-end rates,” Padhraic Garvey, head of global rates and debt strategy at ING, told CNN in an email.
Bond yields help set interest rates across the economy. The 10-year US Treasury yield is the benchmark for mortgage rates. As the 10-year yield has surged this year, mortgage rates have climbed. The average 30-year fixed mortgage rate rose last week to its highest level since July 2025.
A surge in bond yields can make life less affordable and compound concerns about the cost of living.
The rise in yields is a global phenomenon, with borrowing costs in Europe and Asia also hitting multi-year and multi-decade highs. Bond yields in France, Italy and the United Kingdom also surged on Wednesday.
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