The Treasury Department’s plan to expand purchases of long-dated government debt is beginning to show signs of improving liquidity in the bond market without preventing yields from responding to economic conditions—even though the actual purchases will not begin for weeks. Since Treasury Secretary Scott Bessent announced last week that the department would at least double the size of its buybacks of longer-dated securities, Treasury bonds have outperformed interest-rate swaps of comparable maturities. The gap between the 30-year Treasury yield and the equivalent swap rate has narrowed to its smallest since February. Bloomberg News first reported the narrowing gap. That movement suggests the purchases are reducing the additional yield investors demand to own and trade Treasury securities, rather than imposing an official ceiling on long-term interest rates. Interest-rate swaps allow investors to gain exposure to fixed or floating rates without owning government bonds. Comparing swap rates with Treasury yields can therefore help distinguish changes in the general price of long-term interest-rate risk from changes caused by conditions specific to the Treasury market. Those Treasury-specific factors include the availability of particular securities, dealer balance-sheet capacity and the relative difficulty of financing or selling older bonds. When Treasuries outperform swaps, it can indicate

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