US Treasury Doubles Bond Buybacks: Can Bessent Halt the Debt Crisis?

How Will the Treasury Finance These Purchases?

The Treasury cannot create money like the Federal Reserve. Its only real avenue is to sell short-term debt to finance the purchase of long-term bonds. This strategy, similar to the Fed's Operation Twist in 2011, has already moved markets: yields on 3- and 6-month T-bills rose, flattening the yield curve.

Analysts at Robeco told Infobae that the Treasury could reduce the supply of longer-dated bonds in its next quarterly refunding in November, but warned that shortening the average maturity would make interest payments "more sensitive" to Fed policy.

Global Asset Managers Skeptical

Major investment firms worldwide remain doubtful. Eoin Walsh, portfolio manager at Twenty Four AM (a Vontobel boutique), said that while the move brought "some relief", the factors that could drive a significant drop in yields are "limited".

Meanwhile, Eiko Sievert, managing director at Scope Ratings, criticized that the buybacks "do not address the underlying fiscal challenges" of the United States. Public debt has already surpassed $40 trillion, representing 123% of GDP, with an estimated deficit of 6.3% for 2026.

By the Friday after the announcement, yields were already climbing again: 5.25% on the 30-year bond and 4.7% on the 10-year, according to Infobae data.

The Forces Behind the Storm

Analysis from Investing.com identifies three main causes of upward pressure on rates:

• The war with Iran: Brent crude started the year at $60 and now costs 53% more, exceeding $90. The promise of imminent peace was the tranquilizer calming markets.
• The AI boom: Hyperscalers like Alphabet (which issued a century bond) compete with the Treasury for investor capital, offering attractive yields.
• The Fed under Kevin Warsh: The Federal Reserve chair blocked a rate hike in July that Logan, Hammack, and Kashkari had promoted, adding pressure on long-term rates.

What Could Happen Between Now and November?

José Siaba Serrate's analysis for ámbito.com suggests that Bessent's intervention is "a very short-term patch". The buybacks cease on November 4, and a deal with Iran that reopens the Strait of Hormuz could render the whole discussion abstract.

However, the columnist warns that "winning the standoff will not prevent the erosion of Treasury credibility". The fundamental solution would be for the Fed to raise the federal funds rate by a quarter point to reinforce its credibility—something Chair Warsh might facilitate.

Markets have already adjusted: yields rose in the "belly" of the curve (2 to 7 years), the dollar was "shorted", and bitcoin had a powerful rally that "fits perfectly with the legislative agenda Trump is pushing"—the Clarity Act.