The Secretary of the Treasury of the United States, Scott Bessent, has pointed out that the country's bond buyback program could finally exceed 4 billion dollars (3.456 billion euros) per issuance, a figure that already doubles the current cap and comes in a context of strong increases in the interest rates demanded on debt with maturities between 10 and 30 years, which in recent days have marked maximum levels.
"We regularly conduct buybacks and we are going to increase the volume of buybacks. (...) It is worth noting that it could exceed 4 billion dollars per issuance," Bessent stated in an interview granted to the television network CNBC.
After this announcement became known, on Wednesday there was a notable easing in the yields of long-term U.S. debt. The 30-year bonds reached 5.187%, down from the 5.337% recorded the previous day, while the yield on the 10-year bond fell to 4.637%, from the prior 4.748%.
However, this respite was short-lived, as on Thursday there was a new widespread increase in yields, practically erasing the declines of the previous day. Thus, the 30-year bond stood at 5.241% and the 10-year bond climbed back up to 4.7%.
Bessent explained that he has "a wide range of tools" to contain the increase in financing costs for the U.S. government. Among these measures, he considered it essential to "give signals and demonstrate that we believe that yields do not reflect the underlying fundamentals," while advancing the possibility of increasing the volume of buybacks.
"We want to indicate that we believe this is a segment of the market with low liquidity, that we are in August and that there have been many corporate issuances that have been influenced. We believe that there are many underlying factors that the market is not taking into account. And we are going to energize this market," the Treasury official emphasized.
The Secretary added that his goal is "for people to focus on the fundamentals and not be swayed by the headlines" and pointed out that "markets probably got ahead of themselves a bit," partly because "many people didn't have much to do in August," thus highlighting the additional pressure on the bond market during a period of low activity.
The U.S. debt exceeds 40 trillion, but Bessent downplays it
This Thursday, the public debt of the United States has surpassed for the first time the threshold of 40 trillion dollars (34.4 trillion euros), according to data released by the Department of the Treasury. Despite this, Scott Bessent has downplayed the situation and insisted that there is a high degree of misinformation surrounding these figures.
"There is nothing magical about those 40 trillion dollars. And we can get out of this situation through economic growth," he asserted, before emphasizing that citizens should interpret it as "investment for the future" and not as "government spending."
Even so, the Treasury official has indicated that in the coming days they will present a new fiscal plan aimed at consolidating public accounts and strengthening the federal budget.