JPMorgan: US Bond Buybacks Treat Symptoms, Not Root Causes; Long-End Rates May Keep Rising

JPMorgan believes that the US Treasury's expanded buybacks can only provide short-term relief and are unlikely to change the long-term pressure on long-end yields. The real constraint lies in a fiscal deficit as high as 6% of GDP and over $3.5 trillion in future financing needs, rather than market liquidity. If the Treasury frequently times its operations, it will also undermine the credibility of "regular and predictable" policy, ultimately pushing up term premiums and long-term yields.