The U.S. Treasury market remains "high fevered"! BofA has expanded its repurchase plan, emphasizing "it is not quantitative easing."

U.S. Treasury Secretary Becerra stated on Tuesday that the Treasury Department decided last month to expand the buyback program for older maturity U.S. Treasuries, primarily to "cool down" the recently heating bond market and push it back towards a state of equilibrium. He also denied that this operation constitutes quantitative easing (QE) and refuted the notion that the recent decline in U.S. Treasuries is mainly due to investors' concerns over the growing scale of U.S. debt. While attending an event in Washington on Tuesday, Becerra expressed that his responsibility is to push the market back towards equilibrium, but he does not believe the Treasury can change the equilibrium price of assets themselves. "My job is to try to push the market back to equilibrium," Becerra stated. "I don't think I can change the equilibrium price, but markets never remain in equilibrium for long." Becerra made these comments as the Treasury Department is set to conduct its first longer-term buyback operation for older bonds under the expanded program on Wednesday. Last month, the Treasury announced an increase in buyback efforts after the yield on 30-year U.S. Treasuries briefly reached its highest level since 2007, putting significant selling pressure on the long-term Treasury market. Regarding the market environment at that time, Becerra described the bond market as being in a "fever" state. Becerra, who has a long history of serving as a hedge fund executive, stated that based on his past experiences in financial markets, when market participants engage in speculation, they often seek to accelerate market movements. One of the goals of expanding the buyback program is to help restore balance in such situations. The buyback of U.S. Treasuries refers to the U.S. Treasury purchasing already issued government bonds in the secondary market. This program mainly targets older securities with relatively weak liquidity, aiming to improve market functioning and liquidity rather than directly altering the overall scale of government debt. Meanwhile, Becerra denied that the recent sell-off of U.S. Treasuries is primarily due to concerns from investors over the government's continuously expanding borrowing. He believes that if the market truly began to worry about the U.S. credit situation, investors, in theory, would sell U.S. Treasuries and shift to German bonds, but the actual market performance contradicts this. "If everyone is worried about U.S. credit, then you should sell U.S. Treasuries and buy German bonds, but the reality is quite the opposite," Becerra stated, adding that U.S. Treasuries have performed relatively better. Furthermore, Becerra explicitly denied that the Treasury's expansion of the buyback program amounts to another form of QE. Quantitative easing is typically implemented by the Federal Reserve, which injects liquidity into the financial system through large-scale purchases of government bonds and other securities, thereby lowering long-term borrowing costs, and has been used several times during past economic and financial crises. "I am not doing QE," Becerra asserted. Compared to QE, Becerra has previously preferred to liken his policy approach to the Federal Reserve's historical "Operation Twist."