EddieJayonCrypto
14 Jun 25
The U.S. Treasury has spent $20 billion in two weeks on historic buybacks of securities maturing between May and July. This has sparked speculation on social media that the Treasury is conducting stealth quantitative easing (QE) similar to the Federal Reserve's money-printing. However, experts like ...
The U.S. Treasury has executed a $20 billion buyback operation over two weeks, focusing on repurchasing securities maturing between May and July. This significant move aims to improve bond market liquidity by replacing older, less liquid bonds with newer, more liquid ones. Contrary to social media speculation, these buybacks are not a form of stealth quantitative easing (QE) akin to the Federal Reserve’s money-printing tactics.
Experts like Jim Bianco clarify that the Treasury cannot create money; instead, it borrows by issuing new "on-the-run" bonds and uses the proceeds to buy back older "off-the-run" bonds. This process does not inject new money into the economy but enhances the overall quality and liquidity of the bond market, slightly reducing liquidity premiums by a few basis points.
Treasury Secretary Scott Bessent highlighted buybacks as part of a broader strategy to support and stabilize the bond market when necessary. This approach underscores the Treasury’s intent to maintain market confidence and functionality without resorting to monetary easing measures.
In summary, the Treasury's buyback operation represents a tactical effort to refresh the bond market’s composition and liquidity, dispelling misconceptions about it being a covert economic stimulus. The move affirms the Treasury’s commitment to market stability through measured and transparent financial management.