The Treasury Department is beginning to buy tens of billions of dollars in U.S. bonds in an effort to shore up the market.
In a series of announcements, the department details the $50 billion buyback operation, which began on August 7 and will last until October 31.
The agency is looking to buy both short and long bonds in an effort to increase liquidity and ease concerns about vulnerability and volatility in the $25 trillion U.S. Treasury bond market.
The buybacks are intended to encourage dealers by offering a steady and predictable buyer.
As for where the money for the buyback will come from, the Treasury typically uses cash from its reserves or sells new bonds to raise cash, which in turn creates new debt.
At recent Treasury auctions, demand has been weaker than expected, including from foreign buyers, forcing the government to offer higher-than-expected interest rates.
One such auction on August 7 saw poor demand, as reported by Bloomberg, as volatile swings in interest rates exacerbated investor concerns about whether the US is heading into or already in recession. underline.
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