US Treasury's Liquidity Support Buyback Expansion (p. 2)
- The U.S. Department of the Treasury announced on August 19, 2026, that it is doubling the size of its liquidity support buyback operations for longer-dated nominal coupon securities (p. 2).
  - The maximum size per operation will increase from $2 billion to at least $4 billion (p. 2).
  - The change is effective from September 9, 2026, through the remainder of the refunding quarter ending November 4, 2026 (p. 2).
  - The operations target the 10-to-20-year and 20-to-30-year sectors to provide greater liquidity support (p. 2).
- Prior to August 20, 2026, the Treasury's 2026 refunding included $20.2 billion in 20-30Y operations (11 operations) and $42.2 billion in 10-20Y operations (22 operations), plus $0.2 billion from long-dated TIPS (p. 2).
Market Reactions and Debt Implications (pp. 1-2)
- US debt exceeded $40 trillion for the first time on August 18, 2026, and now exceeds US GDP (pp. 1-2).
- Bond prices fell 21 points in the 14 hours following the Treasury's statement before restoring equilibrium (p. 2).
- Gold's market response reflects uncertainty, with independent bond market experts suggesting the buyback expansion is "akin to applying a plaster to an open wound" given the size of the US debt (p. 2).
- Debt held by the public rose by $2.45 trillion year-over-year (an 8.2% gain), with these holders being highly price-sensitive (p. 2).
- Funding costs are expected to rise because the average coupon on outstanding stocks is below current yields, meaning rolls on maturity will be set at higher rates (p. 2).
Federal Balance Sheet and Bond Yield Status (pp. 1-3)
- The Federal Reserve balance sheet has edged up by $0.11 trillion so far in 2026, reaching $6.74 trillion (p. 2).
- While 30-year bonds are literally not underwater, 5-year and 10-year bonds are (pp. 1, 3).
- The 30-year bond is currently trading well below par (p. 2).

Bonds, basement and US debt (2-minute read)

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