Bessent's Bond Buyback Bites the Dust as Yields Rise Again

Treasury Secretary Scott Bessent's efforts to calm the bond market by announcing a larger bond buyback program have failed so far. The yield on the 10-year Treasury note, a key benchmark for mortgage rates, rose back to 4.69% Thursday, nearly where it stood early Wednesday before Bessent's announcement.

The buybacks are intended to reduce the supply of 10-year to 30-year bonds and boost their prices. Yields on bonds fall when their prices rise. Despite this, the 30-year bond yield rose to 5.23% Thursday, down only slightly from a 19-year high reached Tuesday.

Bessent said Thursday on CNBC that the bond repurchase program could be larger than $4 billion per operation and argued that the yields don't reflect the underlying fundamentals. However, Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, said reducing the deficit is mostly up to Congress rather than the Treasury Department.

The rise in interest rates has put pressure on the Federal Reserve's new chair, Kevin Warsh, to clarify his approach when he delivers a high-profile speech next Friday at an annual Fed conference in Jackson Hole, Wyoming. Mark Cabana, head of U.S. rates strategy at Bank of America Securities, said that elevated uncertainty about how the Fed is going to contain inflation is driving up borrowing costs.