Wall Street dealers are on high alert as US Treasury Secretary Scott Bessent prepares to unveil the details of an expanded Treasury buyback program. The Treasury Department is expected to announce on Wednesday the scale of repurchases slated for the following day, targeting bonds with remaining maturities of 10 to 20 years. Based on established patterns, such announcements typically hit the wire at 11 a.m. in Washington. This marks the first such update since the Treasury surprised markets by signaling it would significantly bolster buybacks of longer-dated securities. On August 19, the Treasury stated it would at least double the size of repurchase operations for bonds in the 10- to 30-year range, coming just two weeks after its quarterly refunding schedule was published.

Despite repeated queries, Bessent has declined to specify the exact size of the September 10 buyback operation, although his recent public remarks have led many to anticipate a figure exceeding $4 billion. On Tuesday, he framed the initiative as a move to "cool down" the market, a clear reference to last month's selloff that pushed long-term yields to multi-year highs. Currently, the 10-year Treasury yield, a key driver for US mortgage rates, sits even higher than it did last month, heightening scrutiny of the upcoming operation. If the buyback comes in at just $4 billion, it could disappoint investors and intensify selling pressure in the world's largest bond market. Conversely, a more substantial package might establish a new benchmark for future long-end purchases. According to Morgan Stanley estimates, $10 billion represents a more realistic upper bound. The next operation focused on longer-dated debt is scheduled in two weeks.

A larger-than-expected buyback could also signal that Bessent's concerns over yield levels have deepened since the surprise expansion was announced last month. "A marked increase in the size would essentially be an admission that the Treasury's rushed August 19 decision wasn't fully thought through," noted Lou Crandall, senior economist at Wrightson ICAP, in a client note. While Crandall suggests a starting range of $5 billion to $6 billion could be logical, he concedes that given the Treasury's rapid strategic pivots in recent weeks, an even larger operation wouldn't be surprising. The Wednesday announcement carries additional weight as it arrives just hours before the Treasury's next 10-year note auction, with a 30-year bond sale following the next day. The Treasury declined to comment on the forthcoming buyback schedule.