Treasury's Buyback Relief Lasted Two Days as Long Yields Snapped Back
U.S. markets are closed for the weekend. The next opening bell is Monday, August 24, at 9:30 a.m. ET (4:30 p.m. in Istanbul).
The spine of last week was the bond market, not equities — and the Treasury's intervention held for exactly two days. The 30-year yield touched 5.34% on Tuesday, a 19-year high, before the Treasury announced on Wednesday that it was raising its long-end buyback operations from $2B to at least $4B per issue, running September 9 through November 4 across the 10-to-20-year and 20-to-30-year sectors. The 30-year fell to 5.184% on the news and the 10-year dropped roughly 6 basis points to 4.66%, and on Thursday Bessent said the operations could run larger still: "Part of it is signaling here to show that we believe yields don't reflect the underlying fundamentals." The relief did not last. By Friday's close (August 21) long-end yields had snapped back to where they were before the announcement, because neither of the two forces pushing them up has gone away — escalation risk in the U.S.-Iran standoff, and a fiscal picture strained by public debt above $40T. The mechanism explains the limit: a buyback is the Treasury repurchasing its own paper in the secondary market to shrink the float, which eases liquidity in the long end but does nothing to the deficit generating the supply, so the repricing it buys is borrowed time rather than a floor.
The second story closed the book on July's AI blowup. In a letter to investors Friday, Ken Griffin disclosed that Citadel has unwound more than 80% of the risk it absorbed from Situational Awareness, selling over $4B of market value across more than 100 block trades and setting ten separate single-session records along the way. The fund, launched in 2024 by Leopold Aschenbrenner, was long memory chipmakers, data-center operators and power producers while shorting software names it expected AI to disrupt; it ran leverage as high as 400% and lost roughly $35B from a July peak near $45B once margin calls hit. and alone accounted for more than half of the disclosed book at the end of June, and they fell nearly 47% and about 29% respectively.
