To Fix the Treasury Market, Wall Street Says Bring Back Buybacks
- Issuing new bonds to retire old ones may restore liquidity
- Buybacks were used from 2000 to 2002 amid budget surpluses
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Wall Street dealers are calling on the U.S. to revive a tool it last used almost two decades ago as a liquidity crisis roils swaths of the government bond market.
JPMorgan Chase & Co. and Bank of America Corp. want the Treasury Department to initiate its first buyback program since 2002 after volatility soared in the $16.9 trillion market for U.S. debt. Under the operation, the government would use the proceeds from selling new securities -- which dealers favor for trading -- to buy back older notes and bonds, which trade less frequently. In the past week, some of this legacy debt has become almost impossible to transact, exacerbating price moves across the market.