As the yield on 30-year U.S. Treasury bonds rises, the Treasury Secretary reassures the market, indicating that the scale of long-term Treasury repurchases may exceed $4 billion.

U.S. Treasury Secretary Brainerd said Thursday that the Treasury Department may further expand the scale of its long-term U.S. Treasury bond buybacks, and the actual buyback amount could exceed the previously announced $4 billion per offering. Brainerd noted that the Treasury aims to improve liquidity in the long-term Treasury bond market by increasing buybacks and signaling to the market that the current level of long-term yields does not adequately reflect the fundamentals of the U.S. economy. On Wednesday, the Treasury Department announced that it would double its planned long-term Treasury bond buyback scale from $2 billion to $4 billion per offering. Following the announcement, long-term Treasury bond prices surged, and yields fell significantly. In an interview on Thursday, he indicated that the Treasury will continue to increase the scale of buybacks and specifically mentioned that the buyback scale for each offering could exceed $4 billion. He stated that the Treasury plans to play a more proactive role in the long-term Treasury bond market, which has seen a significant rise in yields recently, to improve trading conditions. Following Brainerd's remarks, U.S. Treasury yields experienced a slight decline, although the yield drop witnessed after the Treasury's announcement to expand buybacks on Wednesday had largely been recovered. The latest trading of 30-year Treasury yields is around 5.235%, having recently surged to levels not seen since before the 2008 global financial crisis. Brainerd acknowledged that the long end of the Treasury yield curve is under significant pressure and believes that the current level of long-term yields does not align with U.S. economic fundamentals. He mentioned that the Treasury has a vast toolbox of policy instruments and will decide whether to take further measures based on market conditions. He also pointed out that the market liquidity for 30-year U.S. Treasuries is very poor, which further necessitates action from the Treasury. The U.S. Treasury market is typically one of the largest and most liquid bond markets globally, so the significant deterioration in long-end liquidity has drawn the attention of policymakers. Recently, rising long-term Treasury yields have been driven by multiple factors. On one hand, the expanding U.S. government debt and fiscal deficit have increased market concerns over the supply of Treasury bonds and fiscal sustainability; on the other hand, a surge in investments in artificial intelligence infrastructure has led companies to issue bonds on a large scale, competing with U.S. Treasuries for investor funds. In addition, rising yields on sovereign bonds from other major economies like Japan, along with a continuous increase in the term premium for U.S. Treasuries, have further elevated long-term financing costs in the U.S. The term premium refers to the additional yield compensation that investors require for holding long-term bonds. Data released by the Treasury Department on Wednesday showed that U.S. public debt has surpassed $40 trillion for the first time this week. Regarding this symbolic threshold, Brainerd downplayed its significance. Brainerd stated, The $40 trillion figure itself is not magical; we can gradually resolve this issue through economic growth. He further pointed out that the message the U.S. is sending to allies and trading partners is that promoting global economic growth is a crucial way to address the substantial debt burden. At the same time, Brainerd revealed that he will meet with Russell Vought, the director of the Office of Management and Budget, to discuss the issue of fiscal consolidation. In light of the U.S. debt surpassing $40 trillion and persistently high long-term financing costs, how to control the fiscal deficit, improve debt structure, and reduce interest burdens is becoming an important fiscal challenge faced by the U.S. government.