On October 1, 2026, the US Department of the Treasury completed a $6 billion bond buyback, exhausting the operation limit. This occurred as the yield on 10-year Treasury bonds reached 5.342%, the highest level since April 2002. The bond buyback allows the government to repay part of its debts before maturity. During the operation, investors offered bonds worth $46.4 billion, from which the Treasury selected $6 billion, distributed between only two of the 41 eligible bonds. Both bonds offer a low interest rate and mature in 2041 and 2042. Approximately $4.47 billion in cash was paid for the $6 billion buyback.
It is important to note that yields continue to rise despite the expansion of the bond buyback program, which was increased from $2 billion to at least $4 billion per operation since August 19. Long-term yields are increasing due to a broad deficit, inflation exceeding target levels, and massive borrowing by technology companies involved in AI financing. Secretary of State Scott Bessent stated that further increases in the buyback volume are planned.
Bessent noted, "We will actively market these bonds. We regularly conduct buybacks and plan to increase their size to more than $4 billion per issuance." Against this backdrop, Bitcoin reached a high of $85,000 the day before following the release of lower inflation data from the PCE index, but its current price is $84,624, up 0.9% over the past 24 hours. Notably, not all experts consider the situation critical. ARK Invest CEO Cathie Wood argues that a 10-year bond yield above 5% is a sign of a functioning market. Upcoming employment data and extended bond buybacks will continue for another five weeks, which may lead to reduced borrowing costs.
Related articles
