August 19, 2026

The US Treasury is resurrecting Operation Twist:

The Treasury Department made a surprise move Wednesday after bond yields hit their highest levels in almost two decades, doubling its planned purchases of longer-term bonds and easing pressure on the market.

Bonds rallied, driving yields lower, after the announcement, providing some relief after a sell-off earlier this week sent yields around the globe to their highest levels in years.
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The Treasury Department said it will at least double the size of buybacks from September to early November, focusing on longer-dated bonds from 10-year to 30-year Treasuries, according to a statement.

The 30-year yield dropped nine basis points to 5.2% after the announcement, providing short-term reprieve. The drop comes one day after the 30-year yield rose above 5.3%, hitting its highest level since 2007.

Buybacks from the Treasury Department are a standard operation in bond markets, but the timing of the announcement after a major sell-off highlights the Trump administration’s sensitivity to the rise in yields.

PerpetualDiscounts now yield 5.60%, equivalent to 7.28% interest at the standard conversion factor of 1.3x. Long corporates yielded 5.28% on 2026-08-18; allowing for 1bp decrease in yield due to ZLC price gains on 2026-8-19 results in 5.27% on 2026-08-19. Therefore the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has remained constant at the 200bp reported August 12 to 200bp.