Faltering Market Liquidity Renews Prodding for Treasury Buybacks
- Treasury hasn’t done buybacks of off-the-runs for two decades
- Some dealers see it adding a backstop as Fed withdraws
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The escalation of liquidity troubles in U.S. Treasuries caused by the strains tied to Russia’s invasion of Ukraine is giving fresh impetus to calls for the government to revive purchases of older securities -- a move that could improve trading conditions.
The U.S. Treasury last bought back government securities in earnest in April 2002, as part of a program launched in an era of budget surpluses to retire debt with high interest-rate coupons. While U.S. debt managers over recent years have been doing “small-value” operations to ensure the readiness of its buyback infrastructure, Wall Street has long said they should create a new program.