(Bloomberg) -- After Treasury Secretary Scott Bessent surprised dealers with his willingness to intervene in the bond market to drive down yields in recent months, Wall Street is now girding for the biggest revamp in guidance for US Treasuries issuance since early 2024.
Many dealers expect the Treasury to alter the guidance in its quarterly policy statement, which for more than two years has laid out steady plans for note and bond issuance. A shift in Wednesday’s announcement could pave the way for potential cuts in 2027 to sales of the longest-dated debt, balanced by bigger auctions of bills and shorter-term notes.
Some are prepping for more drastic action. Citigroup Inc. predicts the Treasury will announce cuts to sales of 20- and 30-year bonds starting this month — effectively violating the guidance issued in the last so-called quarterly refunding statement. Just one week after that last plan, Bessent unexpectedly ramped up buybacks of outstanding securities, in a move seen as a reaction to a surge in yields.
“Buybacks are too small to really move the needle,” April LaRusse, head of investment specialists at Insight Investment, said in an interview. She put it simply: “if you’re running the Treasury and your main power is issuance, if you don’t like where the yields are, you adjust your issuance.”
The proviso for any major shakeup this week is that yields have retreated since longer-dated rates hit their highest in more than two decades in early October. Still, 30-year bonds on Friday were trading with yields above 5.30%, around levels seen in mid-August when Bessent intervened with his expanded buyback program.