Wall Street Says Treasury Buybacks Are a Long Way Off, If at All

The US Treasury won’t buy back government debt to shore up market functioning before May 2023, if ever, analysts are saying.

Wall Street is split on if the Treasury will act after the agency pledged to further explore an initiative to buy back older securities, which could address concerns about the difficulty in being able to trade certain Treasuries. Findings will be shared in subsequent quarterly releases, according to an announcement on the agency’s debt-management strategy released Wednesday.

The pledge suggests concerns on liquidity in the nearly $24 trillion Treasury market aren’t pressing for the official sector, even as liquidity metrics for the US government debt market approach crisis levels after a year of steep losses for bonds, driven by rising inflation and Federal Reserve interest-rate increases, and as the central bank simultaneously cuts some of its holdings.

Economists from Jefferies Financial Group Inc. said they doubted a buyback program would ever see the light of day while JPMorgan Chase & Co. experts said a plan is likely quarters away, though “unlikely to meet the market’s lofty expectations.”

Last month, Secretary Janet Yellen flagged the potential for buybacks of certain US government securities, acknowledging that it has become more difficult to buy and sell some securities, particularly in larger amounts, in recent years.