U.S. Treasury Secretary Scott Bessent announced a doubling of long-term debt buybacks, increasing operations from 2 to 4 billion dollars maximum per operation. This decision directly conflicts with Federal Reserve Chair Kevin Warsh’s strategy, which relied on rising long-term bond yields to help fight inflation, currently at 4.2 percent against a 2 percent target. By flooding the long-term bond market with purchases, the Treasury is mechanically pushing yields down, undermining the market-driven tightening Warsh wanted to rely on. Analysts fear the Fed may need to compensate with a more aggressive increase in short-term rates to maintain its overall stance against inflation.
Source: Read the original article
