US Treasury to Double Long-Dated Buyback Sizes, Keep Auction Calendar Unchanged

The US Treasury will double the maximum size of its liquidity-support buybacks for long-dated debt while leaving its regular auction schedule unchanged. In a statement released Aug. 19, the Treasury said it will lift maximum buyback sizes from $2 billion to at least $4 billion per operation for nominal coupon securities with maturities of 10 to 30 years. The expanded operations begin Sept. 9 and run through Nov. 4. Auction sizes remain steady. In its Aug. 5 quarterly refunding announcement, the Treasury reaffirmed unchanged issuance of $58 billion in 3-year notes, $42 billion in 10-year notes and $25 billion in 30-year bonds, for a total of $125 billion. Of that total, about $96.3 billion will be used to refinance maturing securities, while $28.7 billion represents net new borrowing. The buybacks focus on "off-the-run" Treasuries—older issues that typically trade less frequently than the latest benchmarks. Over time, these securities can become less liquid, accumulating on dealer balance sheets and hindering market functioning. Longer-dated Treasuries have faced sustained pressure since late June, as some market participants have pointed to a buyers' strike in long-duration debt. Softer demand for 10- and 30-year bonds can leave dealers holding more inventory than desired, straining balance sheets and reducing overall market efficiency. By buying older bonds from dealers at competitive prices, the Treasury aims to ease balance-sheet constraints and support participation in new auctions. The move builds on the liquidity-support buyback framework introduced in 2024. The decision to raise maximum sizes follows what the Treasury has described as strong dealer engagement and high-quality offers in earlier operations. After the announcement, yields on longer-dated Treasuries fell, a move traders interpreted as a signal of the Treasury's intent to help maintain orderly conditions at the long end of the curve. With auction sizes steady and buybacks larger, net long-dated supply available to the market could tighten as the government absorbs more older paper.