Societie Generale Research discusses the UST buyback program.

 

"Yesterday, we argued that recent softer US economic data, and upticks in forecasts for the UK, Eurozone, and even Japan, pointed to modest dollar weakness and made our (dollar-bullish) year-end FX forecasts look unreachable. Within a couple of hours, Scott Bessent changed the outlook even more, by announcing that he was doubling, to USD 4bn, the amount of bonds the Treasury can buy back to help with market liquidity. This isn’t QE, it doesn’t necessarily mean that more bonds will be bought and, in any case, it is small compared with the size of bond purchases we got used to under QE," SocGen notes.

"As the US publicly held debt level reaches 100% GDP and budget deficits remain high, this will be a growing issue, which will either force the US to tighten fiscal policy, accept higher borrowing costs, or let the dollar weaken. No prizes for guessing which solution the market now sees as most likely," SocGen adds.