Billionaire investor: US Treasury buybacks hurt credibility

Billionaire investor Stanley Druckenmiller on Monday criticized the Treasury Department’s buyback expansion plan, arguing it represents an artificial attempt to interfere in the bond market. 

In a Wall Street Journal opinion piece, Druckenmiller noted bond yields dipped after the Treasury unveiled the plan on Wednesday but rose back to their previous levels the next day. The yield on the 30-year Treasury bond is nearly 5.2 percent as of Tuesday morning, roughly one-tenth of a percentage point below last week’s peak.

“The market’s verdict was swift and correct: This wasn’t liquidity management, it was price management — and a mistake far larger than $4 billion suggests,” the investor wrote, referring to bond yields rising again on Thursday.

Starting on Sept. 9, the Treasury will double the maximum value of longer-dated securities, specifically in the 10-to-20 year and the 20- to 30-year sectors, that it can purchase from $2 billion to $4 billion per operation.........

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