Treasury bought back $6B in bonds, but dealers say bigger isn’t enough
The US Treasury used the full $6 billion limit in a Nov. 4 buyback, but two bonds accounted for nearly 98% of purchases, leaving questions about whether the program helps dealers holding other older securities. Dealers say buybacks have modestly improved liquidity, but want more frequent operations, earlier communication and limits to spread purchases across bonds. The Treasury accepted $6 billion face value of debt for about $4 billion in cash; the operation does not automatically create liquidity for Bitcoin or other risk assets. A Federal Reserve study found buybacks reduced dealer inventories but did not significantly reduce repo activity. Treasury expects up to $70 billion in liquidity-support buybacks through January and is reviewing program design.
