(Sept 23): The US Treasury said it will purchase up to US$6 billion (RM24.48 billion) of longer-dated government debt on Thursday, in line with the first such operation under Secretary Scott Bessent’s expanded programme to stem the recent rise in borrowing costs.

The maximum size is triple the amount initially communicated to investors back in early August of US$2 billion. That original plan was discarded in a surprise Aug 19 announcement, when the Treasury said it would “at least double” the size of such operations.

Treasuries maturing in 20 to 30 years, which are the target for Thursday’s buy-backs, extended their sell-off on Wednesday after the announcement. The 30-year yield hit a session high of 5.38% — close to the peak earlier this month of almost 5.40%, which was the highest since 2007.

Bond yields have climbed worldwide on the back of higher energy costs since the US’ war with Iran erupted in late February. That’s flipped the outlook for Federal Reserve monetary policy, with chairman Kevin Warsh raising overnight interest rates for the first time since 2023 last week to help tame price pressures.

Bessent has defended his move to upsize the buy-backs in the face of criticism that it amounted to an intervention that did nothing to address underlying fiscal challenges. He said on CNBC on Monday that he acted after he thought markets were “moving away” from equilibrium prices. He touted that 30-year bond yields had risen only about a basis point between the announcement on Aug 19 and Sept 21.

Earlier on Wednesday, one of the world’s largest financial-industry associations warned that attempts at “financial engineering” did nothing to address underlying debt dynamics. Interventions such as purchasing securities in the secondary market “may provide temporary relief, but they cannot resolve the structural drivers of rising debt”, the Institute of International Finance (IIF) said in a report.

After the last upsized buy-back announcement, on Sept 9, bonds fell after the department announced the maximum size would be US$6 billion. While that was triple the initially announced amount of US$2 billion, some market participants had predicted an even larger size given the department’s theoretically limitless guidance that it would “at least double” the size.

In the end, the Treasury chose not to fill the maximum amount, buying only around US$5.2 billion of debt maturing in 10 to 20 years. That reflected a lack of competitive bids, according to officials. Investors offered US$10.5 billion of securities to the Treasury at that operation.

Uploaded by Tham Yek Lee