The U.S. Treasury stepped in on Thursday to calm a widening sell‑off in the bond market. Overnight it announced that it will double the size of buybacks for long‑duration Treasury debt, a move intended to halt the climb in yields that had pushed the 30‑year Treasury rate to its highest level since 2007.
Yield relief and market reaction
In early Asian trading the 30‑year yield slipped to 5.1890%, down nine basis points from the previous session, while the benchmark 10‑year rate fell to 4.6466% after a five‑basis‑point drop on Wednesday. Analysts said the announcement signaled that officials are watching pressure on long‑end borrowing costs, flattening the yield curve overnight.
Japanese government bond yields also eased, with the 20‑year JGB down 7.5 basis points to 3.70% and the 10‑year JGB falling 4.5 basis points. In Europe, German bund futures and French OAT futures ticked higher, indicating lower yields.
Investor caution
While the Treasury’s action appears to have put a floor under falling bond prices for now, market participants warned the support may be temporary. One chief investment officer noted that the Treasury’s intervention could encourage further selling by institutional holders, comparing the buyback to a company’s share repurchase followed by new share issuance.
Equities and currency moves
Improved sentiment lifted equities, with MSCI’s broadest Asia‑Pacific index outside Japan and Japan’s Nikkei each gaining about 1.2%. Nasdaq futures rose 0.5% and S&P 500 futures edged up 0.16%.
The dollar weakened, hovering near a 2½‑month low against a basket of currencies at 98.86. The euro held near its May‑29 high at $1.1674, and sterling steadied at $1.3600 after a prior rise.
Fed outlook and commodities
Federal Reserve minutes released Wednesday showed continued concern over inflation, with several policymakers ready to raise rates if inflation does not move toward the 2% target. Analysts expect the next major Fed signal to come from Chair Kevin Warsh’s upcoming speech at the Jackson Hole symposium.
In commodities, Brent crude rose 0.33% to $91.92 a barrel, while U.S. crude futures held a 1% gain at $85.81. Spot gold slipped 0.6% to $4,492.56 an ounce.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
