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Treasury bond-buy plan pushes 10-year yields lower, UBS says
UBS argues higher yields would raise US debt service costs and worsen the affordability crisis, framing the bond purchase program as a counter to market side effects from the Gulf war and tariffs.
UBS chief economist Paul Donovan says a US Treasury plan to at least double purchases of long-term government bonds helped spark a rally, driving 10-year Treasury yields down to levels seen a week ago, according to FXStreet.
Donovan said higher yields would worsen the US affordability crisis and increase debt service costs, which he noted can quickly become a political focus.
He also argued the policy is intended to offset unintended bond-market effects linked to other factors, including the Gulf war and tariffs, while highlighting that uncertainty around Federal Reserve policy could add a financial market risk premium.
The note additionally points to ongoing sensitivity to central bank signals, referencing the latest Fed meeting minutes, and flags that market attention remains on upcoming US data and Middle East headlines for further trading impetus.