JAKARTA – The United States government, through the Department of the Treasury, has repurchased (buyback) government bonds worth USD 10 billion.

According to Barchart, this buyback is the largest single-operation purchase ever conducted by the US government in history.

Based on an official report from the US Bureau of the Fiscal Service, as cited by Hokanews, the buyback programme on 3 June 2025 received bids totalling USD 22.87 billion and absorbed the full USD 10 billion target.

Previous buybacks by the US Treasury, as cited by Marketwatch, were conducted on a much smaller scale between 2000 and 2002, with a total of around USD 67.5 billion spread across more than 40 operations.

So, does this mean the US government is sending a signal to the market about its ability to repay its debt, which now stands at USD 36.5 trillion?

“I think the buyback amount is too small compared to the total federal debt of USD 36.5 trillion to draw any significant conclusions,” said a bond market observer on 7 June.

He speculated there were three reasons why US Treasury Secretary Scott Bessent—a seasoned hedge fund figure and former Chief Investment Officer at Soros Fund Management and founder of global investment firm Key Square Group—decided to conduct a buyback:

  • First, the bonds being bought are illiquid. So the aim is to improve trading in those specific bonds.
  • Second, to smooth cash flow in terms of issuance (of new bonds) and maturity management—essentially replacing maturing bonds with longer-dated ones that have better liquidity profiles.
  • Third, to reduce costs slightly by repurchasing high-interest bonds and replacing them with lower-rate ones. “This buyback is reportedly part of a quarterly target totalling USD 30 billion.”

Asked whether this buyback is an effort by the US to “guide” government bond yields—which have been trending upward—lower, amid tensions in both domestic and international bond markets due to declining confidence in what was once considered a safe haven asset, the observer responded:

“Again, the amount is too small. And that’s not the US Treasury’s mandate. That role falls to the Fed (the US central bank). The Treasury’s job is to ensure market liquidity and reduce costs.”

Previously, in May, the US Federal Reserve quietly issued bonds totalling USD 150 billion but only managed to sell USD 78 billion.

This government bond purchase by the Fed also comes as its financial statements show operational losses for the first time since 1915, with total losses in 2023 and 2024 amounting to USD 192 billion. (MT/ZH)