Wrightson: The size of the US long-term Treasury bond repurchase program may be confirmed before Thursday.

The U.S. Treasury is under pressure to clarify the remaining Treasury repurchase arrangements for this quarter as soon as possible to avoid catching the market off guard again.

According to Bloomberg, Lou Crandall, senior economist at Wrightson ICAP, said in a recent report that the Treasury Department may finalize the size of its repurchase agreements for the remaining maturities of this quarter in the coming days, aligning with the arrangements for the auction of interest-bearing bonds to be announced on Thursday.

Crandall explicitly stated that if the Treasury Department postpones the disclosure of key information until September 9, by which time 10-year and 30-year Treasury bonds will have already been trading for several days, causing the market to worry about the risk of being hit by another sudden news event, "which is not in the long-term interest of the Treasury Department."

He emphasized that clarifying the repurchase program as soon as possible is crucial to maintaining the Ministry of Finance's principle of "regular and predictable" market communication.

On Monday, the yield on the 10-year U.S. Treasury note broke through 4.75% for the first time since January 2025, as escalating tensions in the Middle East and a surge in oil prices fueled market bets that the Federal Reserve would raise interest rates.

The window of opportunity is narrowing, with Thursday becoming a crucial turning point.

According to Crandall's analysis, the Treasury Department will announce the auction arrangements for 3-year, 10-year, and 30-year Treasury bonds in mid-September this Thursday.

This means that the scale of the 20-year Treasury bond repurchase scheduled for September 10 must be clarified before Thursday, otherwise it will create an information mismatch with the subsequent auction arrangements.

He also pointed out that the Treasury's decision not to update the repurchase schedule last week was "wise" in itself—waiting until the end-of-month auction to supplement the repurchase details is a reasonable pace and helps to avoid making premature statements before the information is complete.

Previous practices have drawn criticism, and the principle of "regularity and predictability" has been questioned.

Crandall criticized the Treasury Department's earlier handling of the matter. He pointed out that the sudden adjustment of the net issuance rules just hours before the 20-year Treasury bond auction, after the bonds had been trading in the pre-issuance market for over a week, was a "serious departure" from the Treasury Department's long-standing principle of "regularity and predictability."

As previously reported by Bloomberg, Treasury Secretary Bessant's unexpected move to expand the repurchase program of longer-term Treasury bonds was interpreted by the market as a sign of concern over high yields, leading to escalating skepticism. A timely and clear disclosure of the repurchase arrangements would be a crucial opportunity for the Treasury to restore its credibility in market communication.

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