US Treasury Just Doubled Size Of Liquidity Support Buyback — El-Erian Says Move Is More About Possibility Of Broader Deployment Of Yield Curve Control

• With the latest announcement, the current maximum size of $2 billion per operation will be increased to at least $4 billion per operation. 
• The change is effective Sept. 9, 2026, and will be in effect for the remainder of this refunding quarter through Nov. 4, 2026. 
• The U.S. fiscal deficit rose to $432.3 billion in July, marking the highest level since March 2021.

The iShares 7-10 Year Treasury Bond ETF (IEF) and the iShares 20+ Year Treasury Bond ETF (TLT) rose on Wednesday morning after the U.S. Treasury announced that it will at least double the size of liquidity support buyback operations for longer-dated nominal coupon securities.

This includes the 10-year to 20-year sector and the 20-year to 30-year sector. Following the development, the U.S. 10-year Treasury yield fell nearly six basis points (bps) to 4.65% while the 20-year yield fell nine basis points to 5.18%.

The 30-year yield also fell nine bps to 5.19% after hitting as high as 5.33% on Tuesday, marking a 19-year high.

Doubling The Size

With the latest announcement, the current maximum size of $2 billion per operation will be increased to at least $4 billion. 

“This increase in buyback operation sizes reflects Treasury’s desire to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants, as evidenced by the significant volume of high-quality offers Treasury routinely receives in longer-dated buyback operations,” the U.S. Treasury stated.

It added that the change is effective Sept. 9, 2026, and will be in effect for the remainder of this refunding quarter through Nov. 4, 2026. 

Rising Yields

The announcement comes at a time when longer-term Treasury yields have been spiking. Multiple factors have contributed to the surge. With the continued uncertainty surrounding the Middle East conflict and the subsequent effects on inflation, huge borrowing related to AI and a high fiscal deficit have pushed the yields higher as market participants demand higher rates for lending money to the government.

The U.S. fiscal deficit rose to $432.3 billion in July, marking the highest level since March 2021.

Economist Mohamed El-Erian noted that the bond market reacted to news of increased Treasury buybacks by pushing longer-term yields down across the board.

‘Beyond the immediate reaction, this move is less about the buyback itself, which is small in both absolute terms and relative to net issuance, than about the possibility of a broader deployment of “yield curve control” (YCC),’ he wrote in a post on X.

Meanwhile, retail sentiment on Stocktwits surrounding TLT shifted into the “bullish” territory from “neutral” a day ago amid ‘high’ retail chatter.

One user on the platform said they aren’t sure whether yields will cool further from current levels.

IEF has lost over 2.5% this year while TLT is down over 4%.

Also Read: WYFI Stock Crashed More Than 22% In Pre-Market Today – What’s The Latest On Its Convertible Note Offering?

For updates and corrections, email newsroom[at]stocktwits[dot]com.