Treasury's Expanded Buybacks Threaten Dollar Stability
The US Treasury is set to announce its expanded long-dated Treasury buyback operations today. The announcement comes after the market reaction was significant when the initial change was first announced in August, with the US dollar falling sharply and fueling big gains in crypto and precious metals.
Treasury has already committed to at least doubling the maximum amount it can purchase in a statement released in August. This means that today's announcement will likely see the current $72 billion annualised limit increase to $144 billion, equivalent to approximately 15.6% of current annual gross 10-to-30-year issuance.
The market is now pondering how much Treasury will look to repurchase. Will it stick with just the doubling, or go further? Several estimates have centred around $6 billion per operation, which would equate to nearly a quarter of current annual longer-dated issuance, while larger estimates suggest buybacks could absorb closer to a third.