The David Lin Report · Monday, June 29, 2026
Michael Howell details how the US Treasury is actively managing bond volatility through buybacks, swapping old, illiquid bonds for new ones. He argues this is a symptom of late-cycle financial stress, as increased bond volatility can destabilize the collateral-based financial system.
“Now, bond volatility is absolutely critical to the health of the monetary system.”
“In other words, what that that is saying is if bond volatility is low, credit creation, liquidity creation actually works very well. But as soon as you start to see jumps in bond volatility, you get problems.”
“And this is what the the Treasury is doing to try and curtail bond volatility in the markets. It's doing what are called buybacks.”