Bank of America Global Research discusses the UST outlook in light of Treasury buyback program.

"Treasury's buyback announcement yesterday was met with some disappointment, driving back-end rates 5bps higher and long-end spreads ended marginally cheaper...The announcement followed Treasury's surprise Aug 19 guidance that it would "at least" double long-end buyback operations for the quarter. Treasury set a max purchase amount of $6b for today's buyback operation and indicated purchase sizes of "= or >$4 billion" for the remaining five long-end buyback operations this quarter," BofA notes.

"We expect Treasury to purchase close to the $6bn max today; buying materially less would risk further back-end cheapening. If Treasury cannot contain the selloff in back-end rates, it may consider more impactful debt-management measures. We continue to recommend clients buy the dip on 30y spreads due to a more activist US Treasury," BofA adds.