Treasury Is Buying Its Own Bonds. Where Is The Money Coming From?

Today’s StocksMoneyMarketsTreasury Is Buying Its Own Bonds. Where Is The Money Coming From?ByJames Broughel,Contributor.Forbes contributors publish independent expert analyses and insights. James Broughel is an economist focused on the economics of regulation.Follow AuthorAug 22, 2026, 07:02am EDT--:-- / --:--This voice experience is generated by AI. Learn more.This voice experience is generated by AI. Learn more.SummaryThe Treasury Department is significantly expanding its long-dated bond buybacks, increasing operations to at least $4 billion each, in a move to curb rising long-term interest rates. This strategy, announced after yields hit 19-year highs, involves funding these repurchases by issuing more short-term bills, effectively swapping longer-term debt for shorter maturities. Experts view this as "fiscal dominance," where Treasury directly influences financial conditions, encroaching on the Federal Reserve's traditional monetary policy role. This "activist Treasury issuance" makes government debt more liquid but raises concerns about increased rollover risk and the growing proportion of short-term bills. Future buyback announcements and the Fed's stance will be closely monitored.Show More Treasury Secretary Scott Bessent moved on August 19 to at least double Treasury's buybacks of long-dated government bonds. The purchases will be paid for by new borrowing.Getty ImagesTreasury Is Buying Its Own Bonds. Where Is The Money Coming From?By James BroughelOn August 19, the Treasury Department announced that it will at least double the size of its “liquidity support” buybacks of long-dated government bonds. The maximum size of each operation rises from $2 billion to at least $4 billion, while the purchases target securities with 10 to 30 years left to maturity. The larger operations run from September 9 through November 4. The announcement landed in a jittery market. The 30-year Treasury yield reached 5.31 percent on August 17, a l...