Treasury triples bond buyback to cap yields; yields hit three-year high the same day

…(cont) The New York Times called it what the numbers show: the bond market rebuffed the plan. Investors were underwhelmed by the details of a move built to reduce borrowing costs, and priced the debt accordingly. The New York Post noted the buyback was largely read as an attempt to cap yields that had already hit levels unseen since the 2008 crash — the crisis, not the recovery, being the last time borrowing got this expensive.

None of this arrived unannounced. On September 2, a week before the filing, the same paper ran the mechanism in advance: the run-up in Treasury yields could hit consumers hard, raising costs across housing and auto loans, and hammering the stock market along the way. The warning ran seven days before the $6 billion answer to it, and the answer did not move the number the warning was about.

So the reconciliation: the Treasury Department filed for lower borrowing costs and got a three-year high instead. The buyback was sized for the government's own debt service; the yield that rose anyway is the one auto lenders and mortgage lenders reprice against, this week, for people who never filed anything with the Treasury Department at all. The government tripled its own bill and the bill it doesn't control went up too. Whose column that gap lands in was named a week before the buyback existed, hon — it just wasn't the government's.