According to a report from Lou Crandall, senior economist at Wrightson ICAP, the U.S. Treasury may increase its buyback of 10- to 30-year bonds above the previously announced $4 billion minimum. Crandall noted that the Treasury "may be reluctant to execute only the minimum scale on Wednesday morning," adding that doing so "could trigger unfavorable market reactions just hours before the September 10-year auction and one day ahead of the 30-year auction, which clearly wouldn't align with Treasury Secretary Bessent's plans." The Treasury is scheduled to buy back 10-year and 20-year notes on Wednesday, followed by additional operations.

Wrightson last week suggested that $4 billion to $6 billion would be within a reasonable range, but now it appears that $5 billion to $6 billion serves as a likely starting point for discussions, though Crandall did not rule out larger amounts. If the buyback scale is tripled, the quarterly net issuance of bonds with 20-year or longer maturities would drop to $85 billion, a reduction of 27%. Crandall indicated that raising the scale to four or five times the original amount—falling within the $8 billion to $10 billion range—is not impossible, but it would mark the second major shift in debt management strategy within just two weeks.

Should the buyback scale increase fivefold, the quarterly pace of new net issuance for bonds with 20-year or longer maturities would slow to just $53 billion, a 55% decline from the level the Treasury announced last month, implying a "significantly more pronounced slowdown" in net supply. Crandall wrote: "This would be equivalent to admitting that the Treasury initially failed to fully consider the hastily announced schedule from August 19." He added that if the Treasury continues to make major adjustments to the buyback program in the coming weeks, then at the November quarterly refunding announcement, "we will have to consider that adjusting coupon-bearing issuance sizes will also become one of the options on the table."

Furthermore, uncertainty surrounding the buyback scale may persist, as the Treasury could continue to decide long-duration bond buyback amounts on a case-by-case basis in the near term. This would keep the bond market guessing about the Treasury's next moves and could also discourage short-sellers from taking aggressive positions.