Treasury's aggressive buyback plan faces steep odds amid soaring money growth

In an effort to reshape the Treasury market, Secretary Scott Bessent announced a doubling of buybacks to a minimum of $4 billion, reviving a version of “Operation Twist” that purchases long-term debt and sells short-term securities. The plan seeks to flatten the yield curve by suppressing long-term yields and nudging short-term rates higher. Historical precedents—including two U.S. Fed twists in the 1960s and 2011, and Japan’s yield-curve control from 2016 to 2024—demonstrate that such maneuvers only work when monetary policy aligns, either by restraining inflation or by supporting money growth.

Current data show broad-money aggregates expanding at nearly ten percent annually, a pace that threatens to undermine Bessent’s objectives. Critics note that without a concurrent tightening by the Federal Reserve, the Treasury’s intervention is likely to be symbolic rather than effective. The column also references Bessent’s earlier involvement in the 1992 Soros-led pound attack, suggesting a pattern of market-shaping attempts that often meet resistance from “bond vigilantes.”