The US Department of the Treasury executed a historic debt buyback operation, repurchasing $12.5 billion in older Treasury securities. This marks the largest single-day buyback in US history, surpassing the previous record of $10 billion set on June 3, 2025.

The operation accepted offers totaling $12.5 billion across 23 issues, out of $34.6 billion in bids submitted by market participants, with settlement completed the following day. The Treasury targeted off-the-run (older, less liquid) nominal coupon securities and Treasury Inflation-Protected Securities (TIPS). It does not typically buy back bills, floating rate notes, or STRIPS.

Conducted through the Federal Reserve Bank of New York’s FedTrade system, the buyback involved primary dealers and other approved institutions. The Treasury paid for the securities at accepted prices, effectively retiring older, lower-yield debt.

The US last ran large-scale buybacks from 2000–2002 totaling about $67.5 billion across multiple operations during budget surpluses. After a hiatus until 2014, buybacks resumed on a smaller scale for cash management and liquidity support.

The Treasury formalized a “regular buyback” program in 2024 to improve market functioning amid rising debt levels now over $36 trillion. By removing older bonds from circulation, the Treasury injects fresh cash into the banking system, easing short-term funding pressures and tightening bid-ask spreads in the Treasury market.

It allows the government to retire low-interest debt early and reissue new securities at current rates, optimizing the maturity structure of the $36+ trillion national debt. This proactive move addresses potential strains from high interest rates, global investor sentiment, and upcoming auctions (e.g., a $39 billion 10-year note auction shortly after the June buyback).

It’s not quantitative easing that’s the Fed’s tool but complements it by reducing supply ahead of new issuance. A Treasury spokesperson emphasized commitment to “short-term flexibility and long-term sustainability” in managing finances.

The buyback boosts systemic liquidity, which historically supports risk assets. Bond yields may dip slightly due to reduced supply, while banks gain balance-sheet relief. Coming amid rate cuts, the end of quantitative tightening (QT), and ongoing repo operations, this adds to a “massive wave of fresh liquidity.”

Analysts see it as a bullish macro signal, potentially lowering yields and spurring year-end rallies. Increased liquidity often flows into high-beta assets like Bitcoin and Ethereum. Experts like Ash Crypto called it a “bullish move” for Q1–Q2 2026, with potential temporary boosts amid 2019-like conditions.

No major controversy emerged, though some Reddit discussions speculated on timing ahead of CPI data, viewing it as preemptive auction support.This operation underscores the Treasury’s evolving toolkit in a high-debt environment, with eyes now on the next quarterly refunding announcement typically early February 2026.

On June 3, 2025, the US Department of the Treasury conducted its largest debt buyback operation to date at the time, repurchasing $10 billion in older Treasury securities.

This marked a significant escalation in the Treasury’s regular buyback program, which had been formalized in 2024 to enhance market liquidity and optimize debt management amid a national debt exceeding $35 trillion.

The operation accepted bids totaling $10 billion out of $22.87 billion submitted, across 22 issues from 40 eligible securities, with settlement completed on June 4, 2025. This surpassed prior small-scale test buybacks typically under $5 billion and set the stage for even larger operations later in the year.

The buyback targeted off-the-run nominal coupon securities and Treasury Inflation-Protected Securities (TIPS) with maturities ranging from July 15, 2025, to May 31, 2027. It excluded bills, floating rate notes, and STRIPS. The operation was executed via the Federal Reserve Bank of New York’s FedTrade system, involving primary dealers and approved institutions.

Bids were submitted competitively, with the Treasury accepting offers at weighted average prices to retire lower-yield, less liquid debt. Results, including par amounts accepted per security and average prices, were published on TreasuryDirect in an updated XML format starting with this operation—improving transparency with detailed breakdowns.

Buybacks were last used extensively from 2000–2002 totaling ~$67.5 billion during surpluses. and resumed modestly in 2014 for cash management. The June 2025 event was part of a quarterly refunding strategy, with plans to resume cash management buybacks around the June tax due date.

It was followed by a second $10 billion buyback on June 10 settling June 11, bringing the two-week total to $20 billion, under a weekly program capped at $10 billion per operation potentially scaling to $30 billion quarterly.

Removing older securities injected cash into the financial system, narrowing bid-ask spreads and supporting smoother auctions amid high interest rates and debt limit pressures extraordinary measures were in use since January 2025.

Debt optimization enabled refinancing at current yields, reducing long-term interest costs and smoothing maturity profiles to avoid peaks in upcoming redemptions.

A Treasury official noted the move promoted “short-term flexibility” in a high-debt environment, with no intent to influence yields directly given the modest scale relative to total debt.

The buyback eased funding strains, slightly compressing yields 10-year notes dipped ~2 basis points post-announcement and bolstering bank reserves. It signaled proactive management, boosting confidence ahead of summer volatility.

As part of a “wave of liquidity” with Fed repo operations, it was viewed as bullish for risk assets, echoing 2019 dynamics. Analysts projected lower volatility in Q3 2025 auctions and potential flows into equities and crypto.

At $10 billion, it was ~0.03% of outstanding debt—significant operationally but not transformative, per bond observers.

No notable controversies arose, though some speculated on political timing near debt ceiling talks. This June operation paved the way for the December 2025 record, underscoring the Treasury’s expanding toolkit.

The U.S. Federal Reserve is expected to trim its benchmark interest rate by a quarter percentage point at the December 9-10 policy meeting, with a large majority of more than one hundred economists surveyed by Reuters predicting another round of easing to support a cooling labor market.

That strong consensus mirrors November’s poll and aligns with the nearly eighty-five percent chance of a cut implied by futures markets, even as policymakers themselves have grown increasingly divided over whether the world’s largest economy needs further stimulus.

The split within the central bank stands in stark contrast to the unity among economists surveyed. The Fed delivered a quarter-point cut in October, but Chair Jerome Powell has repeatedly warned against risking a resurgence of inflation. Powell has stressed that a December cut was far from a “foregone conclusion,” a message sharpened by the fact that inflation has remained above the Fed’s two percent target since March 2021.

Complicating matters further, a forty-three-day government shutdown delayed key economic data releases, leaving policymakers to operate with partial visibility at a time when clarity on inflation, wages, and consumer spending is vital. Minutes from the October meeting revealed deep internal fractures, with some FOMC members saying rates should remain unchanged and several openly opposing the cut that was ultimately delivered.

Still, the November 28-December 4 poll showed an overwhelming eighty-two percent majority—eighty-nine of 108 economists—expecting another twenty-five basis point reduction next week.

Thomas Simons, chief U.S. economist at Jefferies, said the October caution came partly from a lack of available data during the shutdown. He argued that Powell is now unable to rely on that same justification, especially after several Fed governors signaled support for continued easing.

New York Fed President John Williams recently joined governors Michelle Bowman, Christopher Waller, and Stephen Miran in backing rate cuts, saying easing could be done without jeopardizing the inflation goal and would offer insurance against further weakness in the labor market.

Even so, as many as five of the twelve voting FOMC members have publicly opposed further cuts, widening the policy rift at a time when financial markets are clamoring for clarity.

The disagreement among central bankers is also echoed in forecasts for 2026, where divisions are striking. Median projections from the poll point to two additional cuts that would bring the federal funds rate to between 3.00 and 3.25 percent by the end of that year, yet no single quarter shows a clear majority. Concerns tied to the administration’s large tax-cut and spending bill, tariff uncertainties, and questions about the Fed’s institutional independence have all contributed to the fog surrounding long-term rate expectations.

Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research, said reflationary forces rooted in fiscal policy and tariff-driven goods prices will constrain how far the Fed can ease. He warned that the so-called “big beautiful bill” risks keeping price pressures higher than expected. Conflicting public signals from FOMC members on the timing and scale of future cuts have also fueled hedging flows, with investors ramping up protection against policy uncertainty in recent weeks.

A wide gap has also emerged in inflation expectations across the economy. The University of Michigan’s consumer surveys show inflation expectations near four percent, while market-based measures such as breakevens and Treasury Inflation-Protected Securities remain far lower. Gordon said the disconnect is problematic because inflation perceptions remain central to affordability concerns, which have become a dominant issue for households.

Poll medians showed the Personal Consumption Expenditures index—the Fed’s preferred inflation gauge—running above two percent through 2027, suggesting a prolonged, stubborn descent toward the target. Growth expectations also signal a slower trajectory. The U.S. economy is expected to have expanded three percent in the third quarter, shifting sharply to 0.8 percent this quarter. Economists expect growth to average two percent both this year and in 2026.

The tension between cooling economic momentum, sticky inflation expectations, and a splintered central bank lies at the heart of the risks looming over 2026. If fiscal policy maintains its expansive stance while tariffs continue to prop up goods prices, the Fed may find itself trapped between growth concerns and persistent inflation. A sustained disconnect between consumer inflation expectations and market pricing could also force policymakers to take a more cautious route on rates, even as labor markets soften further.

Markets broadly expect the December cut, but the fractures inside the Fed and the uncertainty surrounding the economic path highlight that next week’s move may not signal a smooth easing cycle. Instead, it could mark the beginning of a more contentious debate over how much support the U.S. economy can expect as the effects of this year’s slowdown carry into the next political and fiscal cycle.

Larry Fink, CEO of BlackRock, in a guest column he co-authored with BlackRock COO Rob Goldstein for The Economist, published on December 1, 2025.

They’re drawing a direct analogy between the nascent stage of asset tokenization today and the internet’s awkward adolescence in 1996—back when Amazon was barely a blip with $16 million in book sales, Google and Facebook were years away from existing, and the web felt more like a quirky experiment than a world-altering force.

Fink and Goldstein argue that tokenization—the process of converting real-world assets like real estate, bonds, or funds into digital tokens on blockchains—is on the cusp of explosive growth, much like how the internet went from dial-up novelty to economic juggernaut.

They highlight BlackRock’s own push into this space, including its Bitcoin ETF and tokenized money market funds, as early bets on a “next generation” of markets. It’s a bullish signal from one of Wall Street’s biggest players, especially as regulatory clarity (e.g., from the SEC and EU) starts to grease the wheels.

Why 1996 Feels Like a Fitting Comparison

To ground this historically: Internet in 1996: About 36 million users worldwide 0.9% of the population. Netscape was the hot browser, but e-commerce was a joke—Amazon launched in ’95 with minimal traction. No smartphones, no social media, and “broadband” was sci-fi.

Total tokenized assets under management are around $10-15 billion mostly stablecoins and funds, per recent estimates. It’s functional but clunky—regulatory hurdles, interoperability issues, and scalability lags persist. Yet, pilots from giants like BlackRock, JPMorgan, and HSBC suggest it’s scaling quietly.

If Fink’s right, we’re pre-dot-com boom: expect tokenized real estate marketplaces, instant cross-border settlements, and fractional ownership of everything from art to carbon credits to dominate by 2030. BlackRock’s already tokenizing its $7 trillion AUM empire, so this isn’t hype from a crypto bro—it’s a trillion-dollar asset manager saying, “Get ready.”

Tokenized funds represent a bridge between traditional finance (TradFi) and blockchain technology. In essence, they convert shares of investment funds—such as money market funds—into digital tokens on a public blockchain.

These tokens act as programmable, transferable representations of ownership in the underlying assets. Unlike traditional fund shares, which settle via slow, intermediary-heavy processes (often T+2 days), tokenized versions enable near-instant transfers, 24/7 trading, fractional ownership, and integration with decentralized finance (DeFi) protocols.

This reduces costs, enhances liquidity, and opens up new use cases like using fund tokens as collateral for loans.BlackRock, the world’s largest asset manager with over $10 trillion in assets under management (AUM), is at the forefront of this trend.

Tokenization aligns with CEO Larry Fink’s vision of digitizing capital markets, as he noted in late 2025 that it’s akin to the internet’s early days in 1996—poised for explosive growth.  BUIDLBlackRock’s flagship tokenized offering is the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), launched in March 2024 on the Ethereum blockchain.

It’s a tokenized money market fund designed for institutional investors, providing exposure to short-term, high-quality assets like U.S. Treasuries and repurchase agreements (repos). As of November 2025, BUIDL has grown to approximately $2.5 billion in AUM, making it the largest tokenized money market fund globally.

The fund invests in cash equivalents yielding U.S. dollar returns typically 4-5% annually, based on prevailing rates. Unlike non-yielding stablecoins (e.g., USDC), BUIDL passes through yields directly to token holders via daily accruals, paid out in additional tokens or cash.

BlackRock manages the fund, with Securitize a BlackRock-backed firm handling token issuance, compliance, and transfers as the registered transfer agent. Shares are minted as ERC-20 tokens on Ethereum. Investors subscribe via Securitize Markets minimum $5 million investment for qualified institutions like hedge funds or private equity firms.

Tokens are custodied by options like BNY Mellon (traditional) or crypto-native providers (e.g., Anchorage Digital, BitGo, Coinbase, Fireblocks). Investors can redeem tokens for USD at net asset value (NAV), with blockchain enabling atomic (instant) settlements—cutting out intermediaries.

Initially Ethereum-only, BUIDL now operates across multiple blockchains for broader accessibility and DeFi integration:November 2024: Added Aptos, Arbitrum, Avalanche, Optimism’s OP Mainnet, and Polygon.

In May 2025, BlackRock introduced sBUIDL, a DeFi-wrapped version using Securitize’s sToken framework. This ERC-20 token unlocks composability—e.g., using BUIDL as collateral in permissioned lending pools or yield optimizers—while maintaining regulatory compliance. It has helped push BUIDL’s AUM past $1.7 billion earlier in 2025.

BlackRock envisions tokenizing $10 trillion of its AUM over time, including ETFs, real estate ($39 billion managed), and structured products. In September 2025, they advanced plans for tokenized ETFs, converting popular iShares funds into on-chain versions for faster creation/redemption and borderless trading.

Still, with pilots like BUIDL proving viability—hitting $1 billion AUM in under 40 days—BlackRock is betting big on tokenization as the “next generation infrastructure for finance.”