The US Treasury used its full $6 billion limit in Thursday’s bond buyback, retiring older long-term debt early. The move came as the 10-year Treasury yield touched 5.342%, its highest since April 2002.
A yield is the return investors demand to lend to the government. When it climbs, mortgages, business loans, and federal borrowing all cost more, and Bitcoin (BTC) has struggled to hold its gains.
What Did Treasury Actually Buy in Its $6 Billion Bond Buyback?
In a buyback, the government repays some of its bonds before they mature.
Investors offered $46.4 billion of bonds, according to Treasury’s results. Treasury took $6 billion, spread across just two of 41 eligible bonds.
Both pay low interest and mature in 2041 and 2042. Treasury paid about $67 and $76 for every $100 of face value.
At those prices, retiring $6 billion of debt cost roughly $4.47 billion in cash.
Recent operations fell short of the cap, Reuters reported. That sparked debate over whether the program supports trading or targets cheap pandemic-era bonds.
Why Yields Keep Climbing Despite Bigger Treasury Buybacks
Treasury expanded long-term operations on August 19, from $2 billion to at least $4 billion each. The larger program runs from September 9 to November 4.
Long-term yields had surged on wider deficits, above-target inflation, and heavy borrowing by tech firms funding AI. Treasury Secretary Scott Bessent signaled more was possible.
“We are going to make a market in these. We routinely do buybacks, and we’re going to increase the size of the buyback … it could be more than $4 billion per issue,” Bessent said.
Thursday’s data offered little relief. A survey gauge of what US factories pay jumped to 77.9, while oil sat near $91, per FXEmpire.
Bitcoin topped $85,000 on Wednesday after cooler PCE inflation data, the Federal Reserve’s preferred price gauge. It now trades at $84,624, up 0.9% in 24 hours, according to BeInCrypto price data.
Not everyone sees danger. ARK Invest CEO Cathie Wood argued a 10-year yield above 5% reflects a working market.
Friday’s jobs report is next, and the expanded buybacks have five weeks left to pull borrowing costs lower.