Wall Street Douses Treasury's Hopes: Even Tapping Trillion-Dollar Treasury Account, Debt Buybacks Unlikely to Lower Long-End Yields

Deutsche Bank believes that if the Treasury General Account (TGA) funds debt buybacks, the overall impact on reserves and short-term supply may largely offset each other. Goldman Sachs argues that even if the Treasury expands buybacks, it would be difficult to "reset" long-term interest rate levels, as buybacks do not address the primary sources of recent long-end volatility—fiscal deficits and inflation. Wells Fargo and other institutions are similarly skeptical, seeing "structural" pressure on long-end yields and expecting a further steepening of the yield curve.