JPMorgan Chase criticizes US Treasury Secretary Scott Bessent's bond buyback plan, calling it a short-term stopgap and insufficient in scale
James Sullivan, co-head of global fundamental research at JPMorgan Chase, stated that the U.S. Treasury's repurchase of long-term bonds while issuing short-term notes is like "paying a mortgage with a credit card," only alleviating short-term pressure without addressing the fundamental debt problem. The JPMorgan Chase rates team warned clients that this move could be perceived as "lacking credibility," leading investors to demand higher term premiums. The Treasury previously announced an increase in the size of liquidity-support buybacks for 10-30 year bonds from $2 billion to at least $4 billion, but JPMorgan Chase noted that this amount is "virtually negligible" compared to the $32 trillion Treasury market.
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