Bessent Plays Hardball With "Bloomberg Bros": Yields Spike As Treasury Accepts Just 68% Of Maximum Buyback Offers
The Treasury accepted 68% of the maximum offers in its latest expanded buyback operation as Treasury yields spiked. The result renews questions about demand for the program’s longer-dated purchases and the market’s sensitivity to supply and liquidity signals.
The Treasury accepted just 68% of the maximum offers in its latest expanded buyback operation, according to the report, after the operation offered capacity of $6 billion. The result came as Treasury yields spiked, extending a rates-market reaction that has focused attention on the program’s ability to attract sufficient offers.
Two weeks earlier, the first expanded operation had a $6 billion maximum capacity and resulted in $5.187 billion of accepted buyback offers. Treasury yields then reached a three-year high, although they remained below 5%, according to the report.
The program’s demand is being judged against recent longer-dated buyback activity. Bank of America rates strategist Mark Cabana had cited $18.7 billion of offers received across several recent 10-year-to-20-year buybacks ahead of the first expanded operation.
The immediate uncertainty is whether the latest acceptance rate reflects a temporary mismatch between Treasury’s terms and dealer offers or a broader limit on demand for the expanded format. Further operations and the direction of Treasury yields will provide the next evidence on how the market is absorbing the program.
The Treasury accepted 68% of its $6 billion buyback capacity as Treasury yields spiked.
The latest acceptance rate makes the next buyback a test of whether the expanded format can consistently draw offers without adding to rates-market strain. The prior operation accepted $5.187 billion against $6 billion of capacity, while recent 10-year-to-20-year buybacks had received $18.7 billion of offers, leaving the evidence mixed rather than directional.
A subsequent operation that attracts offers near its maximum capacity would undercut the demand concern; a further yield spike would instead show the market reaction is broadening beyond the buyback mechanics.
CoverageSource: ZeroHedge · Published here THU, SEP 24 · 2:36 PM ET · 2 reports · 2 publishers in this record · latest listed: MarketWatch · THU, SEP 24 · 5:32 PM ET (reaction)How this is decided →
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The Treasury’s program still accepted $5.187 billion in the prior expanded operation, and recent 10-year-to-20-year buybacks had received $18.7 billion of offers.
The latest operation accepted only 68% of its $6 billion capacity as Treasury yields spiked, indicating weaker take-up than the program’s maximum allows.
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