[Morgan Stanley Says U.S. Treasury Expands Bond Buyback Program to Signal Focus on Long-Term Rates]
According to Tide Research, a Morgan Stanley report dated August 20 noted that the U.S. Treasury will increase the scale of buyback operations for 10-20 year and 20-30 year Treasury bonds from $2 billion per transaction to at least $4 billion, effective September 9. The combined increase for the two maturities amounts to a nominal value of $1.6 billion, corresponding to approximately $19.3 million DV01. Morgan Stanley believes that the U.S. Treasury's decision to expand buybacks outside the quarterly refinancing window is intended to signal to the market its focus on the dynamics of long-term interest rates. The recent rise in 10-year Treasury yields reflects the market's repricing of energy costs and central bank policy paths, rather than concerns over deficits or supply.
