JPMorgan Criticizes US Treasury's $4B Bond Buyback Amid $40T Debt

The US Treasury's plan to buy back $4 billion in bonds to address weakening demand has drawn criticism from JPMorgan, which compared the move to "paying your mortgage with your credit card." The strategy involves repurchasing longer-term bonds with high yields and issuing shorter-term debt as payment, raising concerns amid the US national debt nearing $40 trillion. Global debt levels have soared to more than $350 trillion, equal to about 305% of global GDP, up from 240% in 2005, according to the Institute of International Finance.

JPMorgan's James Sullivan, co-head of global fundamental research, warned on CNBC's "Squawk Box" that the Treasury’s buyback is only postponing the debt problem.

"Paying your mortgage with your credit card can work for a while, but eventually the mismatch starts to become more obvious," Sullivan said. He emphasized that the Treasury is deferring the debt issue to a later date, highlighting the limitations the department faces in addressing the problem effectively.

The announcement initially lowered 30-year Treasury yields from a 19-year high of 5.34% to 5.18%, though yields have since risen near 5.25%. Padhraic Garvey, ING bank's Head of American Research, noted that the timing of the buyback was unexpected, stating it will likely "dampen but not abort the pressure" on bond markets.