The Treasury Department’s plan to expand purchases of long-dated government debt is beginning to show signs of improving liquidity in the bond market without preventing yields from responding to economic conditions—even though the actual purchases will not begin for weeks.
Since Treasury Secretary Scott Bessent announced last week that the department would at least double the size of its buybacks of longer-dated securities, Treasury bonds have outperformed interest-rate swaps of comparable maturities. The gap between the 30-year Treasury yield and the equivalent swap rate has narrowed to its smallest since February. Bloomberg News first…
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