Treasury buyback risks a (collateral) chain reaction
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Rebalancing of bond tenors could stretch collateral links to breaking point, argues economist
The optics of America’s national debt crossing $40 trillion has alarmed markets. This week’s announcement by the US Treasury of a $6 billion buyback operation is marginal at best and unlikely to calm investors, as seen by the knee-jerk rise in bond yields.
The Treasury is due to reveal the results of the operation later today. But buybacks of long-term debt could have other unintended consequences
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