US Treasury selective in US Treasury repo operations, rarely fails to purchase the full cap.
1 days ago
In U.S. Treasury Secretary Scott Bessent’s first expanded-scale Treasury repurchase operation, the amount of long-dated Treasuries purchased fell short of investor expectations, exacerbating a selloff and pushing U.S. long-term bond yields to multi-year highs. On Thursday, the Treasury bought $5.187 billion in 10- to 20-year Treasuries, below the previously announced maximum repurchase size of $6 billion. The 10-year U.S. Treasury yield rose to its highest level since 2023 following the operation. Investors submitted a total of $10.5 billion in bond sell offers to the Treasury in this round. While the Treasury is not obligated to purchase the full maximum amount, this marks only the third time it has opted not to buy the full cap in 53 long-dated Treasury repurchase operations since the program was relaunched in 2024. Molly Brooks, a strategist at TD Securities, noted: “This signals the Treasury is being more selective than usual. If the Treasury wants to meet market expectations and complete the full repurchase amount to lower long-end rates, it may need to accept less attractive bids in future operations. At the very least, the precedent of the Treasury buying 100% of the maximum cap in the past has been broken, which could help realign market expectations.”
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