TD Securities said that the US Treasury Department plans to “at least double” the 10-year treasury bond repurchase scale. If the maximum repurchase size for each operation is 4 billion US dollars, it may reduce the 10-year Treasury term premium by about 5 basis points. Molly Brooks, an interest rate strategist at TD Securities, said in a research report: “If the Treasury increases the maximum size of each repurchase operation to $4 billion, it could further reduce the supply of long-term treasury bonds by $18 billion each quarter. We estimate this will reduce the term premium by about 5 basis points”. Brooks said that the current term premium has dropped by about 13 basis points, “which indicates that some market participants may expect a larger scale of repurchases, or that the scale of long-term treasury bond auctions may decline.” Brooks said that reducing the scale of long-term treasury bond auctions would be more in line with the Ministry of Finance's “regular and predictable” debt issuance strategy, adding that if it deviates from this predictable model, it may instead push up term premiums and offset the benefits of reducing long-term supply.

TD Securities said that the US Treasury Department plans to “at least double” the 10-year treasury bond repurchase scale. If the maximum repurchase size for each operation is 4 billion US dollars, it may reduce the 10-year Treasury term premium by about 5 basis points. Molly Brooks, an interest rate strategist at TD Securities, said in a research report: “If the Treasury increases the maximum size of each repurchase operation to $4 billion, it could further reduce the supply of long-term treasury bonds by $18 billion each quarter. We estimate this will reduce the term premium by about 5 basis points”. Brooks said that the current term premium has dropped by about 13 basis points, “which indicates that some market participants may expect a larger scale of repurchases, or that the scale of long-term treasury bond auctions may decline.” Brooks said that reducing the scale of long-term treasury bond auctions would be more in line with the Ministry of Finance's “regular and predictable” debt issuance strategy, adding that if it deviates from this predictable model, it may instead push up term premiums and offset the benefits of reducing long-term supply.