Treasury is buying back $192 billion a year of its own long-term bonds, funded with short-term bills.
Andy Constan, founder of Damped Spring Advisors, told Excess Returns that's not liquidity housekeeping — it's the same rate-suppression move he once accused the Yellen Treasury of making, done "possibly more aggressively."
"Ironically, Secretary Bessent is doing the same thing, and possibly more aggressively."
Andy has tracked Treasury's quarterly refunding announcements for decades, and says the report has mattered far more since COVID blew up the scale of federal financing.
The full interview is covered here so you can skip it. 15 minutes of audio, 4 minutes of reading.
Here are the 4 arguments that matter.
Excess Returns Clips · Oct 25, 2026 · 15m · 11m saved
With Andy Constan, Founder at Damped Spring Advisors
Key Takeaways
Treasury buys back $192 billion a year in long-term bonds against $444 billion of annual issuance, funded by T-bills rather than new on-the-run supply
A legitimate buyback swaps illiquid debt for fresh debt — this one just shrinks net issuance instead, which suppresses long-term rates
The 20-year bond has no natural buyer base of benchmark funds or mortgage investors, and trades at a higher yield than the 10- or 30-year
Canceling the 20-year only works if its $168 billion in annual supply moves to 10s and 30s — financing the gap with bills would just suppress rates again
Suppressing long-term rates is inflationary, Andy argues, which makes it a job for the Fed, not the Treasury
1. A bigger report since COVID
Andy opened by explaining why Treasury's routine quarterly refunding announcement has become a market mover.
Quarterly refunding became a bigger deal once COVID-era financing exploded
"Since COVID, the amount of financing has been so large... it became a much more important report." — Andy Constan
Treasury's job, he said, is to get the best aggregate price across every maturity without overwhelming any one part of the curve, against a roughly $2 trillion annual deficit.
"We run a two trillion dollar deficit... we just have a ton we have to sell." — Andy Constan
