Two documents landed today that most desks will read separately. Treasury put out a notice this morning: from September 9 the liquidity support buybacks in the 10-year to 20-year and 20-year to 30-year sectors run at a minimum of $4 billion per operation, up from a $2 billion maximum, through the refunding quarter ending November 4. The stated reason is “consistent strong sponsorship” in the long end. Then at 2pm the Fed released the July minutes: nine votes to hold at 3.50-3.75%, three dissents for a hike (Hammack, Kashkari, Logan), “price pressures appeared broad based,” and the Desk continuing reserve management purchases of bills with reserves judged “within a range consistent with an ample supply.”
Read together, they describe one system with two hands on it. Treasury is standing a bid under its own long bonds. The Fed is buying bills and holding, with a third of the committee leaning the other way. And the liquidity story underneath both is fiscal.
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The bid under the long end
