US Treasury Seeks Bond Yield Relief through Debt Buybacks

The US Treasury is planning to lower long-term bond yields by buying back debt. However, this effort requires coordination with Federal Reserve Chairman Kevin Warsh.

Treasury Secretary Scott Bessent wants to reduce long-term Treasury yields, but he needs the Fed's cooperation to achieve this goal. To facilitate this, Warsh has proposed revising the 1951 Treasury-Fed Accord to give the Treasury more influence over the Fed's balance sheet.

The Fed currently holds $6.7 trillion in assets, and historically, it has only intervened in bond markets during emergencies. There is no clear indication that the Fed will act now. Markets are watching Warsh's remarks at the upcoming Jackson Hole symposium for clues on the Fed's stance on bond yields and its independence from Treasury influence.