Citadel Warns of Dollar Weakening with Expanded Treasury Buybacks

Citadel Securities has warned that an expanded US Treasury buyback program could have unintended consequences, including a weaker dollar and higher inflation.

The firm described the policy as financial repression, which it said would do little to resolve underlying problems such as large fiscal deficits.

Treasury Secretary Scott Bessent is increasing buybacks in an effort to lower long-term Treasury yields. However, Citadel Securities believes that this could push down long-term yields while adding pressure on the dollar and inflation.

In addition, the firm said that intervention in the Treasury market alone would not be enough to ease large fiscal deficits and inflation pressure, and that lasting rate stability may require fiscal tightening and interest-rate increases by the Federal Reserve.