The size of the US Treasury market has expanded dramatically in recent years to more than $34tn, with greater demands on market liquidity. In particular, with the Federal Reserve's policy of raising interest rates and shrinking its balance sheet in response to inflation, as well as international geopolitical tensions and economic frictions, foreign central banks' demand for US Treasuries has declined, resulting in frequent liquidity challenges in the market.


In this context, the US Treasury's repurchase of Treasury bonds, especially those with poor liquidity, aims to provide necessary liquidity support and maintain market stability by directly participating in market transactions.
The repurchase operations, which will be conducted through the New York Fed in cooperation with major dealers, are scheduled to repurchase up to $2 billion of long-term Treasury securities each week over the next three months. It is worth noting that the Treasury deliberately avoided the most liquid bonds in the repurchase market to ensure that the repurchase action was targeted to address the problem of market illiquidity.