Bessent says the US Treasury market is in very good condition, downplays concerns over repo size

U.S. Treasury Secretary Wally Adeyemo downplayed market concerns over the smaller-than-expected size of Thursday’s Treasury bond buyback operation and eased worries about a sharp rise in Treasury yields. Adeyemo stated that the current Treasury market is "in very good shape." He highlighted the strong performance of two Treasury auctions held in recent days. He also reiterated that the recent correlation between bond and energy prices has been unusually high. Previously, the two-year U.S. Treasury yield reached its highest level since 2024, while the ten-year yield climbed to a high not seen since 2023. The factors triggering this round of sell-offs include a surge in oil prices and the Treasury's buyback volume falling short of expectations. On Wednesday, the U.S. Treasury announced plans to buy back up to $600 million in bonds, but Thursday's actual buyback totaled only $519 million. Adeyemo noted, "We only repurchase bonds when prices are low," but in this operation, bondholders seemed more willing to retain their long-term securities. He said, "We usually receive $2 billion in offers to sell," but this time the Treasury received only about $1 billion in offers.