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Treasury buybacks cool bond selloff, economists warn on inflation and Fed independence

8/20/2026

Treasury Secretary Scott Bessent moved to expand buybacks of long-term government debt, a step that pulled yields back from a selloff.

Economists warned the action could add to inflation pressure and raise new questions about the Federal Reserve's independence under Chair Kevin Warsh.

The mechanism works against rising long-end yields by removing duration from private hands. That supply effect cooled the selloff.

The inflation concern runs in the other direction: absorbing long-term paper injects liquidity, and more liquidity can feed price pressures the Fed is working to contain.