Treasury Secretary Scott Bessent indicated that the recently announced buyback program for longer-dated U.S. government debt could exceed the previously stated cap of $4 billion. In a live interview with CNBC on Thursday, Bessent emphasized the Treasury’s intent to bolster market activity, especially in the 30-year bond segment, where yields have surged significantly. The Treasury had announced on Wednesday that it would double scheduled buybacks from $2 billion to $4 billion, prompting a brief drop in yields, though those gains largely reversed shortly after.

Bessent underscored that the buyback program does not hinge on yield levels but aims to realign market trading with economic fundamentals. He mentioned that the Treasury would assess market conditions continuously and adjust the size of buybacks accordingly, stressing the need for stability in a market characterized by thin liquidity. The Secretary expressed concern over weak liquidity in the long bond market, which traditionally enjoys robust trading activity, and highlighted that current high yields do not accurately mirror the prevailing economic backdrop.

Several factors have contributed to the yield spike, including rising U.S. debt and deficits, competition from increased corporate bond issuance linked to artificial intelligence investments, and higher yields offered by other sovereign debt such as Japan’s. Escalating term premiums, or the additional yield investors require to hold government debt for longer durations, have also played a role. Bessent noted his upcoming discussions with Russell Vought, director of the Office of Management and Budget, focusing on fiscal consolidation measures to help manage debt growth.

During the interview, Bessent referenced the recent milestone where U.S. national debt surpassed $40 trillion, downplaying the significance of the number itself while pointing to economic growth as the key solution for addressing the debt burden. He signaled that the Treasury possesses a broad set of tools to influence the debt market and that buybacks serve as a signal reflecting confidence in fundamental economic conditions rather than short-term headline reactions. The Treasury’s intervention seeks to moderate market volatility and promote a more stable trading environment for government bonds.