Danske Research discusses the UST buyback program.

"Yesterday, the US Treasury announced an increase to buyback volumes of longer-dated Treasury bonds. To be clear, technically such a change should not have a significant impact on broader market conditions, but the timing matters here. The announcement came after a significant rise in long-end yields earlier in August, and at the same day as the US government debt reached USD40 trillion for the first time. The change intends to improve the liquidity of longer-dated off-the-run Treasuries, but as the buybacks are financed with increased issuance of short-dated T-bills, they also reduce the average maturity of all Treasuries outstanding. This drove sharp flattening of the Treasury curve, which is also politically convenient ahead of the midterms, as it means lower long-end mortgage rates," Danske notes.

"In addition, the increased reliance on short-end issuance links the government's financing costs more closely to the Fed's monetary policy - and perhaps it was the renewed concerns of the Fed's independence that helped explain the sharp weakening in broad USD FX.

Speculation aside, do note that the Treasury had recommended a similar change already more than a year ago  meaning that it should not been seen as a purely ad-hoc decision just to support the long-end Treasury market," Danske adds.