The Trump administration's unexpected move to significantly scale up repurchases of long-dated US Treasuries is drawing direct comparisons to the Federal Reserve's "Operation Twist" strategy, a tool last deployed in 2011 to push down long-term interest rates.

Back then, even after the Fed slashed short-term rates to revive the economy from the Great Recession, yields on longer-dated government debt stayed stubbornly high, keeping borrowing costs elevated across the board and blunting the central bank's stimulus efforts.

Today's economic backdrop is far healthier, but the bond market has been in a sustained sell-off since hostilities with Iran began, lifting long-term yields to levels not seen since 2007. That is causing headaches for officials because it raises government borrowing costs and adds to interest burdens for American households just ahead of the November congressional elections.

On Wednesday, the Treasury announced it would at least double the size of its buyback program for notes maturing in 10 to 30 years. Treasury Secretary Scott Bessent, who has long viewed the 10-year yield as a barometer of the administration's economic stewardship, is using the move to try to shift market momentum.

The gambit worked, at least temporarily. The 30-year yield fell as much as 10 basis points to 5.18% before paring losses, while the 10-year yield dropped 5 basis points to 4.66%.

Strategists at Deutsche Bank see the maneuver as a throwback to the Fed's post-recession playbook. "Operation Twist is here," wrote George Saravelos, calling the approach a "mild form of financial repression."

Bessent has already pivoted toward issuing more short-term bills to finance a larger slice of the nearly $2 trillion annual deficit, easing some of the pressure on long-term rates. Recent Treasury guidance has also fueled speculation that Bessent could accelerate that shift by directly trimming the size of some bond auctions. His decision to help support the yen is also seen as an effort to keep Japanese authorities from selling Treasuries to raise dollars. Japan is the largest foreign holder of US debt, and worries about further selling have amplified the bond rout.

Federal housing officials have also stepped into the mortgage-backed securities market to try to lower those rates, but they have kept climbing regardless.

In 2011, the Fed was focused on stimulating growth, not fighting inflation. Today, inflation is the central concern. But back then, the recovery was losing steam, Europe's debt crisis was escalating, and the Fed's benchmark rate was pinned near zero. So the central bank sold shorter-dated securities and used the proceeds to buy longer-dated ones, pulling down long-term borrowing costs.

This is not the first time such a strategy has been deployed. A similar approach was used in 1961, when the Kennedy administration wanted to support a weak economy by lowering long-term borrowing costs without cutting short-term rates, which could have accelerated gold outflows under the dollar's peg to gold. The operation took its name from the Twist dance craze sweeping the country at the time.

The Treasury did not specify Wednesday how it would fund these buybacks, but most analysts expect it will involve issuing more short-term bills, effectively replacing a portion of long-term debt with shorter-dated obligations. Barclays strategists estimate the increased buybacks amount to roughly $16 billion in additional Treasury purchases per quarter, or about $64 billion annually, representing around 15% of the current annual issuance of 20- and 30-year bonds.

In 2024, Bessent criticized the Biden administration's reliance on short-term debt issuance as a pre-election stimulus. After taking office, he initially said Trump's plans would bring down long-term rates by curbing federal spending and inflation. Neither goal has materialized, and the 10-year yield is now higher than when Trump returned to the White House.

Economists Krishna Guha and Marco Casiraghi of Evercore described the Treasury's move as a "very small-scale Operation Twist," warning that if this limited firepower fails to produce lasting effects, it could even backfire. "In terms of fundamentals, this operation has changed almost nothing," they wrote.