Benson to Make a Bold Move Tonight: US Treasury Repo Program Size to Be Revealed Soon

Huitong Network, September 9—— Looking back on August 19, when Besente announced the long-term Treasury buyback plan, gold prices closed with gains of more than 4%.

On Wednesday (September 9) during the European and American sessions, international gold and oil prices both rose. Spot gold was up 1.6%, and international oil prices rose around 3%. The oil price surged due to repeated tensions between the US and Iran, while gold prices advanced as markets bet in advance that Besente’s upcoming announcement on the scale of Treasury buybacks tonight would boost market liquidity.

US Treasury Secretary Scott Besente is reshaping the rhythm of US Treasury market regulation with a decisive and forceful style, and a highly anticipated long-term US Treasury buyback policy is about to reveal its core details.

The US Treasury will announce the specific scale of this round of Treasury buyback operations at around 11 pm Beijing time on Wednesday, with actual trading operations officially implemented on Thursday. The entire regulatory action aims to stabilize Treasury yields and ensure the smooth operation of the market, impacting global bond and foreign exchange markets.

As early as August 19, the Treasury had officially announced the buyback plan, specifying a minimum buyback size of no less than $400 million, mainly targeting existing 10-year and 20-year Treasuries. This baseline size is already twice the usual scale for such operations.

Currently, multiple mainstream Wall Street institutions unanimously predict that $400 million is only a floor for the intervention, and the scale of this buyback round is highly likely to be significantly upgraded. The market generally expects the initial size to fall within the $500 million to $600 million range, with the possibility of an even more aggressive, extreme intervention scheme.

Institutions believe that a $600 million buyback is already a strong intervention. Further expansion to three or four times the normal scale would significantly slow the net supply growth of US Treasuries and thoroughly reshape the bond market's supply-demand structure.

Tough Rhetoric to the Market; Coordinated Exchange Rate Regulation to Address Debt Risks

Compared to quantitative policy measures, Besente’s sharp market attitude has become the main focus of this intervention. This week, he openly issued strong statements to foreign exchange traders, bluntly asserting that “the Treasury now holds the dominant position in the market” and is unafraid of challenges from speculative forces.

In his speech at Southern Methodist University, he once again emphasized his tough stance, allowing traders to freely bet on shorts, demonstrating the Treasury’s firm confidence in its intervention measures. These statements are not merely market intimidation but stem from a meticulous logic of coordinated regulation.

This US Treasury buyback plan works in tandem with policies to support the yen, with the core aim being to avoid the potential risk of a large-scale sell-off in US Treasuries. As the largest overseas holder of US Treasuries, Japan holds $1.1 trillion of US debt. Should the Bank of Japan initiate selling operations, it would significantly push up US Treasury yields.

At present, the US faces high debt pressure, with total federal debt surpassing $40 trillion and the fiscal deficit nearing $2 trillion. The volatility in yields will only further intensify fiscal strains, which is the core reason behind the Besente administration's series of aggressive regulatory policies.

Market Controversy Emerges; Aggressive Intervention Hides Long-term Risks

Besente’s unconventional, forceful intervention model, while stabilizing bond market expectations, has also triggered market volatility and industry debates. Since the buyback plan was announced, the US Treasury market has seen slight turbulence, with the benchmark 10-year Treasury yield rising by about 10 basis points, and the 30-year long-term yield also moving up. Although it has not yet breached the critical 5.3% threshold, the signals of market volatility are already evident.

Industry analysts generally believe Besente’s intervention style has completely upended the US Treasury’s longstanding tradition of “predictable and incremental” policy.

Ian Lyngen, head of rates strategy at BMO Capital Markets, expressed clear concerns: though short-term forceful intervention may calm market volatility and stabilize yields, excessive administrative intervention could undermine the credibility and stability of US Treasuries as core global assets. As the most liquid and deepest core bond market in the world, the orderly operation of US Treasuries is vital, while aggressive intervention may plant hidden risks for long-term market stability.

Awaiting Final Implementation; New Policy Style to Set the Tone

Currently, the global financial markets are holding their breath in anticipation of the official announcement of the US Treasury buyback scale.

This policy implementation will not only directly determine the short-term direction of Treasury yields and reshape the bond market's supply and demand structure, but will also comprehensively define the financial policy style of the US Treasury under Besente.

The direction of future US bond and foreign exchange policies, as well as the approach to addressing debt risks and intervening in financial markets, will all take this major buyback policy as an important reference. Its subsequent market impacts and policy transmission effects warrant close ongoing attention.


(Spot gold daily chart, source: Easy Huitong)

Beijing time 21:44, spot gold is now quoted at $4,417/oz.