The US Treasury Department plans to use between $950 billion and $1 trillion from its operating account to buy back long-term government bonds, specifically securities with 10- to 30-year maturities. This plan, described as a variant of the Treasury Twist, aims to push down bond yields while federal debt exceeds $40 trillion and 30-year yields approach 5.3 percent. The program is set to launch on September 9 with minimum buyback operations doubled from $2 billion to $4 billion per operation. Initial market reaction was subdued, with 10-year and 30-year yields declining only 3.5 to 4.5 basis points. This strategy does not reduce debt or the deficit: when the TGA balance drops, the Treasury must replenish it by issuing new securities, which adds supply and can push yields back up.
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