Excess Returns · Saturday, August 29, 2026
The discussion touches on Scott Bessent's proposed 'liquidity buyback' strategy, which aims to encourage liquidity in specific parts of the yield curve by buying back off-the-run bonds and issuing more liquid ones. There's a debate on whether this is a form of quantitative easing (QE) or an 'operation twist'.
“So, if you go read what he's talking about, he's, it's the liquidity buyback, um, that he's talking about doubling.”
“My understanding is is designed to allow, uh, to encourage liquidity in certain parts of the yield curve.”
“What the concern is, is that Bessent is going to go buy back a 28 year off the run bond and instead of issuing more 30s, he's going to go and issue more bills, right? And so at first blush, it kind of looks like an operation twist.”