Wall Street Bets Bessent Will Tinker Again, and November Is the Real Test
Traders Brace for Another Twist, With Clues Due Friday
Wall Street was wrong-footed in August when Treasury Secretary Scott Bessent unexpectedly upsized purchases of older securities. It has been game-planning for an encore ever since. Per Bloomberg's Oct. 15 report, the first clue could surface Friday, Oct. 16, but the main event is the Treasury's quarterly debt-refunding statement on Nov. 4 — one day after the midterm elections. The move that started it all has a nickname: the "Treasury twist."
The Buyback Ceiling Tripled, and the Clips Came In Small
The timeline is precise. On Aug. 19, Treasury said it would "at least double" liquidity-support buybacks of 10- to 30-year nominal coupons, lifting the per-operation maximum from $2 billion to at least $4 billion, effective Sept. 9 and running through Nov. 4. The first enlarged operation carried a $6 billion cap — triple the old ceiling — and Treasury ended up buying about $5.187 billion. Reuters reported on Oct. 1 that purchases have consistently undershot expectations; Treasury can, and does, reject offers it considers too expensive.
Bessent Calls It Liquidity Management, Not a Yield Cap
Officials have kept one line. Testifying before the House Financial Services Committee on Sept. 15, Bessent framed buybacks as liquidity support and pointed to "the two most successful Treasury auctions that we've had in 20 years," adding that since Trump took office the U.S. bond market had been "the best-performing bond market in the developed world." In an Axios interview published Oct. 3 he called the rise in yields a global phenomenon and a real-rate story driven by strong growth, not a cause for alarm. By Oct. 5 he had softened further, saying he "trusts the process" and that in bonds "you win over time" — after acknowledging on CNBC that Treasury cannot set the equilibrium price.
The 30-Year Touched a 24-Year High Anyway
Buybacks Came In Light, and the Skeptics Pounced
Citi Sees $3 Billion Cuts to 20s and 30s, and Maybe No 20-Year at All
Attention has shifted to what comes next. Citi's head of U.S. rates strategy, Jason Williams, expects Treasury to trim 20-year and 30-year auctions by $3 billion each at the Nov. 4 refunding, funding the gap with more T-bills — and says the 20-year could eventually be scrapped. The dealer survey on Oct. 16 is the early test; if it asks whether long-end demand is being cannibalized by high-grade hyperscaler issuance, Williams sees a potential bullish catalyst. Morgan Stanley Investment Management's Vishal Khanduja wants buybacks doubled and long-end auction sizes cut, but warns Treasury "has to be a lot more predictable" rather than irritating its buyers. BNP Paribas counters that axing the 20-year could push yields higher — and on Oct. 14 the 20-year yield briefly traded above the 30-year's.
