US TSYS/SUPPLY: Treasury Ups Buybacks Roughly As Expected, Tweaks Frequencies

 The major development in today's Refunding announcement is on buybacks, as widely expected. " Treasury believes it is appropriate to: (1) double the frequency of long-end nominal coupon liquidity support buybacks, (2) make a technical adjustment to the TIPS buyback buckets, (3) increase the size of cash management buybacks, and (4) allow a limited number of additional counterparties to directly access buyback operations. "

• The new quarterly buyback schedule is here.
• The announced liquidity operations buyback schedule is roughly in line with expectations - both higher in frequency (doubling frequency of operations of longer-end instruments in the quarter to 4x from 2x) and in aggregate size ($38B / qtr from $30B / qtr). We'd seen expectations that the new aggregate size could be $34B all the way up to $60B so this is perhaps on the low side of expectations but not a big surprise.
• The key here is that the entire increase is in the 10-20Y and 20-30Y range, for which aggregate quarterly buybacks are doubled to $8B.
• For TIPS, Treasury is adjusting the buyback buckets by introducing 1-10Y and 10-30Y buckets (previously the buckets were (1-7.5Y, and 7.5-30Y). There will be 2x operations quarterly for up for $750M for 1-10Y TIPS, and one for up to $500M in 10-30Y.
• Skipping cash management buybacks around the September tax date is only a modest surprise (they will resume in December). That having been said, Treasury is increasing the aggregate size of cash management buybacks from a maximum par amount of $120B annually to $150B annually. We hadn't seen too many expectations either way on that front.
• Finally, Treasury is expanding access to buybacks for more counterparties: "in the first half of 2026 Treasury plans to offer direct buyback access to a limited number of additional counterparties based on their participation in Treasury auctions".
• All of these were mentioned in the May refunding as possible future adjustments to the program ("changes to maximum purchase amounts, buyback operation scheduling and frequency, security eligibility, maturity bucket composition, execution process, and counterparty eligibility").