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US dollar slides to lowest level since late May after Treasury buybacks
The Treasury doubled its debt buyback capacity to at least $4 billion through Nov. 4, supporting longer-dated Treasuries and pulling 30-year yields down about 8 basis points.
The US dollar fell to its lowest level since late May, weakening 0.80% against a basket of currencies to 98.4, as the US Treasury expanded its debt buyback program to calm stress in the bond market, LiveMint Markets reports.
The Treasury raised the maximum size of its buybacks for the period through Nov. 4, saying the program would at least double from $2 billion to at least $4 billion. Under the accelerated effort, it will target the 10- to 20-year and 20- to 30-year segments, which have faced a “buyers’ strike” since late June, according to the report.
The move came as investors sought higher yields amid concern over the US fiscal outlook and persistently high inflation, with longer-end Treasuries selling off sharply. The announcement helped reverse the recent trend by fueling a rally in longer-dated Treasuries, lowering 30-year yields by about 8 basis points.
The dollar also faced additional pressure from expectations that the Federal Reserve is unlikely to start raising interest rates before December, and traders were waiting for minutes from the latest Fed meeting, LiveMint Markets added. The report also notes that long-end sovereign yields often influence pricing across other assets, including mortgage rates.