Treasury Buyback Plan Will Boost Market Resilience, US Debt Official Says

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The resilience of the world’s biggest bond market is top priority as US debt officials prepare to start buying back government debt, according to Josh Frost, the Treasury Department’s assistant secretary for financial markets.

“Buybacks can play an important role in helping to make the Treasury market more liquid and resilient,” Frost said Thursday in a prepared speech during a forum on the Treasury market in New York. Our goal is to “ensure that the Treasury market remains the deepest and most liquid market in the world.”

More recently, a near freeze of the market in March 2020 forced the Federal Reserve into massive purchases to prevent wider financial disruptions. That shock and other disruptions have led various regulators to seek improvements through an inter-agency working group. The department intends to be more “price sensitive” as it chooses the buyback offers to accept — and therefore may end up purchasing “materially” less then the maximum, he said.

 

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