Following the August announcement by the US Department of the Treasury to at least double the scale of its long-dated debt buyback program, Wall Street rate strategists anticipate the department will increase each operation to as much as $10 billion. Strategists at Morgan Stanley noted that under the Treasury's current cash balance management policy, and assuming no additional funds are raised through the issuance of short-dated bills, each of the remaining seven long-dated buyback operations this quarter could reach a maximum of $10 billion. The JPMorgan team expects that once the expanded buyback scale commences this week, operations ranging from $6 billion to $8 billion per session would fall within expectations. Barclays, by contrast, projects a figure only slightly above $4 billion. The wide divergence in forecasts among Wall Street institutions for the first operation since Treasury Secretary Bessent announced the program expansion in mid-August underscores the significant uncertainty surrounding this week's buyback. The Treasury is expected to release preliminary details on Wednesday, including the maximum size of this operation, with the formal buyback of 10-year to 20-year notes scheduled for Thursday. Below are additional rate strategy perspectives from several major Wall Street firms since last weekend.

Bank of America (Mark Cabana and team, report dated September 4) holds a constructive view on 5-year US Treasuries, citing soft economic data and bearish market positioning as supportive factors, while remaining cautious on long-dated duration. The firm favors trades betting on a steepening of the 5s/30s yield curve. The bank attributes recent selling pressure to expectations of a hawkish Fed pivot, market skepticism toward policy, and weak demand for long-end bonds. A reversal in this dynamic would most likely be triggered by deteriorating economic data or a notable equity market correction; a sustained decline in oil prices could also offer some relief. If employment and inflation figures soften, intermediate-term Treasuries could rally, while the long end may lag. The expanded buyback program has so far "done little to bring buyers back into the Treasury market." The Treasury may eventually need to adjust its issuance structure to help stabilize the long end, though the November refunding announcement remains some time away, and any major adjustment could challenge the department's long-held "regular and predictable" issuance framework.

BMO Capital Markets (Ian Lyngen and team, report dated September 4) remains bearish on the long end in the near term, preferring to sell into rallies rather than buy dips. The firm argues that even a doubling of the bond buyback program this week will not resolve the fundamental factors driving 10-year and 30-year yields higher. Given that overall US financial conditions are among the loosest seen in decades, the bond market selloff is likely to persist unless risk assets experience a more sustained decline or corporate credit spreads widen notably. On the question of a September rate hike, BMO believes the key lies in whether pivotal Fed committee members are convinced inflation is trending back toward 2%, and whether August inflation data is sufficient to secure the seven votes needed for a 25-basis-point hike among the hawkish camp. The firm still expects a "hawkish hold," but the bar for a hike is not high if inflation data prove unsettling. Even if the data fail to shift market expectations, implied probability of a near-50% hike could be reflected in pricing as the meeting approaches.

Deutsche Bank (Matthew Raskin and team, report dated September 8) continues to favor steepener trades on swap spreads, as these positions could benefit if the Treasury's long-dated buyback exceeds expectations. From a longer-term and structural perspective, the bank maintains its preference for betting on rising term premia and a steeper yield curve, citing unfavorable fundamentals and the low likelihood of substantial fiscal consolidation.

Goldman Sachs (George Cole, William Marshall, and team, report dated September 4) notes that with no change in their fundamental views on cyclical resilience, inflation risks, fiscal policy, or AI-related debt supply, persistent energy price risks limit the scope for global yields to continue declining from recent highs. The firm favors steepeners on the 5-year and 10-year SOFR curves, with entry at 13 basis points, a target of 23 basis points, and a stop at 7 basis points. Goldman believes term premia could retrace if the market gains clearer visibility into the Fed's reaction function and policy uncertainty subsides, though this depends in part on the September rate decision and its communication. This week's first expanded buyback operation could also present another test for the long end. Should the bond market rally more forcefully, it is expected to be led by the short end and would require a macro environment supportive of a more dovish policy stance. Regarding the Norwegian sovereign wealth fund's potential reduction of $75 billion in US Treasury holdings due to adjustments in its bond portfolio, Goldman sees limited impact on bond yields, with effects likely concentrated in spreads between US Treasuries and other fixed-income assets, given the relatively small scale relative to overall US duration demand and the expectation of gradual implementation.