US Treasury bond buyback: Why yields are still rising

AI summary

<p class="text-align-justify" style="text-align: justify;">Just last week, I highlighted the <a href="https://investinglive.com/news/the-tectonic-shift-that-is-taking-place-in-the-bond-market/" rel="follow">tectonic shift taking place in the global bond market</a> in arguing that markets may have to get used to an era of structurally higher yields. And yesterday's announcement from the US Treasury offers another interesting test of that argument.</p><p class="text-align-justify" style="text-align: justify;">The Treasury said that it will <a href="https://investinglive.com/forex/us-treasury-announces-6-billion-buyback/" rel="follow">buy back as much as $6 billion of 10-to-20-year government bonds</a>, tripling the previous $2 billion size.</p><p class="text-align-justify" style="text-align: justify;">Now on the surface, that should be supportive for bonds. The theory is that Treasury buying removes older securities from the market, helping with liquidity while creating demand and pushing down yields.</p><p class="text-align-justify" style="text-align: justify;">But instead, we're continuing to see 10-year Treasury yields hold near 4.85%, its highest since 2023. So, what gives?</p><p class="text-align-justify" style="text-align: justify;">Why didn't the Treasury's $6 billion buyback push yields lower?</p><p class="text-align-justify" style="text-align: justify;">It is a simple case of expectations versus reality, a tale as old as time in markets.</p><p class="text-align-justify