00:00The U.S. Department of Treasury is increasing by at least double the size of liquidity support buyback operations for
00:05longer dated nominal coupon securities tens to 20 sector and the 20 to 30 year sector. The current maximum size
00:14of two billion per operation will be at least four billion per operation. This change is effective September 9th. If
00:20you can bring up the bond board and show the reaction as I read through this. Treasury will provide more
00:25information about future buyback sizes at the next quarterly refunding scheduled for November
00:294th 2026. This increase in buyback operation sizes reflects Treasury's desire to provide greater liquidity support in longer dated nominal
00:40sectors where there is consistent strong sponsorship from market participants as evidenced by the significant volume of high quality offers
00:47Treasury routinely receives in longer dated buyback operations. The move at the long end off the back of the statement
00:54Mike is notable. Got a move of six basis points on tens close to six basis points.
00:59Likewise on thirties. Mike, what's your reaction? Well, the timing is certainly interesting for this announcement, given the way the
01:07bond market has been trading over the last week or so, because essentially they're pushing up rates again, which the
01:13president is very opposed to. And it makes it much more difficult for the government budgeters who are working up
01:20on Capitol Hill.
01:20The idea of the buybacks is the they buyback old off the run securities that are not heavily traded anymore.
01:28And that puts more people into the current on the on the market securities, which then creates more demand for
01:37it would raise the prices and then, in theory, lower yields.
01:41So we'll have to see how this all works out. The market had anticipated something like this, but the Treasury
01:46has been telling us at refunding that they weren't going to make any changes for quite some time.
01:52And now it looks like maybe they're being forced into it by the way the market's moving.
01:57Mike, that feels like the first sense of of blinking maybe at the Treasury. And maybe that's a little bit
02:01too strong.
02:02But the first the first step of corrective action to help put a lid on what's developing at the long
02:08end of the curve. Is that fair?
02:10Yeah, that's fair. I think that's probably the idea behind it here.
02:14They haven't had scale in terms of buybacks in order to really move the markets.
02:20But this is the first sign that maybe they're moving in that direction.
02:23You.
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