U.S. Treasury Secretary Scott Bessent has doubled the maximum buybacks of long-term Treasury debt from $2 billion to at least $4 billion in an effort to stem the rise in bond yields. The 10-year yield had peaked at 4.74% before falling to 4.65% following the announcement. U.S. public debt stands at $32.2 trillion with the federal budget deficit projected to reach $2.1 trillion this year according to the Congressional Budget Office. These measures risk increasing the threat of sticky inflation and making government debt financing more sensitive to interest rate fluctuations, while also pressuring the independent Federal Reserve to align with the administration’s fiscal objectives.
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