Treasury Unveils New Buyback Plan Amid Rising Interest Rates

The Treasury Department recently announced that it would double the maximum size of certain buyback operations for government bonds with 10 to 30 years left to maturity, from $2 billion to $4 billion per operation.

This move was seen as a liquidity support measure, aimed at making older long-term bonds easier to trade and reducing the risk that dealers retreat during volatile market sessions.

However, some experts argue that this program is not as powerful as it seems. The Treasury's buyback operations are more like exchanging one shape of debt for another, with little effect on net marketable borrowing.

The Federal Reserve's recent minutes also showed that three members voted for a quarter-point rate increase, and many others thought another hike would be needed if inflation failed to retreat. This has led to higher real yields, making Bitcoin and other risk assets more expensive compared to government bonds.