Bessent flags bigger debt buybacks, fiscal plan to tackle bond yields

Treasury Secretary Scott Bessent said the administration is ready to expand its debt buyback program and will soon unveil a fiscal consolidation plan aimed at bringing down the highest borrowing costs in years.

"We are announcing probably at the end of this week, beginning of next week, an increased focus on fiscal consolidation," Bessent said Thursday in an interview on CNBC. He told reporters separately that President Donald Trump had tasked him and Budget Director Russ Vought with that initiative.

The Treasury Department said Wednesday it would increase "by at least double" the size of buybacks for longer-dated securities. Bessent explained the move, which caught the market off guard, was meant to ensure orderly trading during a "thin" summer session and shift investor attention to "fundamentals."

The market impact faded fast. US 30-year bonds erased their gains Thursday. Yields on 10-year securities ended higher than Wednesday's close. Bessent downplayed the reaction, calling "anything that happens within a 24-hour period" noise. He emphasized the expanded buyback operations "could be more than the $4 billion" size currently planned for next month.

Asked how far the Treasury would go to push yields lower, Bessent said: "We have a big toolkit, so we'll see. And part of it is signaling here – to show that we believe that the yields don't reflect the underlying fundamentals."

The announcement came after 30-year Treasury yields touched their highest in almost two decades. Ten-year rates had risen to levels unseen since before Trump took office.

"All we're trying to do is get people to focus on the fundamentals and not trade the headlines during a quiet period in a thin market," Bessent said.

He did not specify which "headlines" he was worried about. On Wednesday, Treasury data showed one broad gauge of US debt had surpassed $40 trillion for the first time.