Bessent Unfazed by $5.19 Billion Buyback Total

U.S. Treasury Secretary Scott Bessent dismissed concerns that the latest government bond buyback operation failed to alleviate pressure in the Treasury market. He maintained that conditions in the U.S. bond market remain "very good," despite the continued surge in long-term yields.

The Treasury Department had previously announced plans to repurchase up to $6 billion in bonds. However, in Thursday's operation, the total volume purchased was only $5.19 billion. This result fell short of the maximum limit, sparking speculation that the buyback program lacks the strength to halt the rise in yields.

Bessent stated that the Treasury purchases bonds only when prices are deemed attractive. In this instance, the government received offers totaling approximately $10 billion—far below the usual volume of around $20 billion. This suggests that holders of long-term bonds are inclined to retain their positions.

U.S. Treasury yields remain elevated. The 10-year yield reached approximately 4.96% at the close of trading on Thursday, up from below 4% prior to the onset of the U.S.-Iran conflict in late February. The 30-year yield is also hovering near levels not seen since 2007.

Bessent argued that the spike in yields does not fully reflect a loss of confidence in U.S. debt. He noted a strong correlation between recent bond market movements and energy prices; the surge in oil prices driven by the conflict with Iran has heightened inflation risks, prompting investors to demand higher yields for holding bonds.

He also accused Iran of attempting to generate economic pressure by driving up oil prices and bond yields. Bessent emphasized that the Treasury's interventions are intended to maintain market stability, rather than signal that the government intends to dictate the direction of bond prices.

Bessent’s remarks sought to reassure the market that the $5.19 billion buyback did not signal weak demand or a policy failure. Nevertheless, with the 10-year yield approaching 5%, significant market pressure persists. As long as oil prices remain high and inflation proves stubborn, Treasury yields are likely to stay elevated, providing support for the dollar while putting pressure on gold and risk assets.