Scott Bessent’s Treasury Buybacks May Only Delay US $40T Debt Pressure, JPMorgan Warns

The U.S. Treasury’s expanded bond-buyback program may ease pressure in long-term debt markets without solving the deeper problem of rising government borrowing, according to JPMorgan.

James Sullivan, JPMorgan’s co-head of global fundamental research, said Treasury Secretary Scott Bessent’s strategy effectively replaces some longer-duration exposure with shorter-term borrowing. That can support market liquidity, but it leaves investors facing a growing supply of debt.

The warning comes as U.S. federal debt has moved above $40 trillion, while governments and corporations globally continue to issue bonds at a rapid pace.

The Treasury Department said it will at least double liquidity-support buybacks for 10- to 30-year securities, raising the maximum purchase size from $2 billion to at least $4 billion per operation between Sept. 9 and Nov. 4. The department says the program is intended to improve liquidity in older securities, not reduce total federal borrowing.

Bessent has also indicated that the purchases could be increased further if market conditions require it.

The policy comes as moves in Treasury yields continue to influence equity valuations, mortgage rates and broader financial conditions.

Sullivan’s broader concern is supply. China’s Treasury holdings have fallen to their lowest level since 2008, while some other major foreign holders have also reduced exposure.

At the same time, developed-market government debt is expected to reach roughly $75.8 trillion in 2026. Corporate issuance is also rising as companies finance AI infrastructure, data centers and reshoring projects.

That competition for capital could require borrowers to offer higher yields. Higher fixed-income returns would, in turn, increase competition with equities, particularly with stock valuations already elevated.

Recent stock market moves have repeatedly shown how sensitive growth shares are to changes in bond yields.