The yield on the 10-year US Treasury note held near 4.7% on Tuesday as investors weighed the implications of the Treasury Department’s expanded debt buyback program. Reports indicated that the US government may draw on its cash balance to fund the additional buybacks, a notable shift given that such operations are usually designed to be cash-neutral and financed through new issuance.
On Monday, Treasury Secretary Scott Bessent declined to offer further guidance on a potential overhaul of US debt management but reassured markets that bond auction sizes would not be cut. Even so, market participants increasingly questioned whether the buyback plan would provide only short-lived relief, reviving worries about the risk of a US debt crisis and potential dollar weakness.
Looking ahead, investors were focused on the upcoming release of the US PCE price index and a speech by Fed Chair Kevin Warsh at the annual Jackson Hole symposium later this week, seeking fresh signals on the future path of monetary policy.
