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Treasury buyback briefly calms long-end yields, but debt fears remain
The Treasury doubled long-end buybacks to at least $4 billion per operation after long-bond yields hit a 2007 high, and the 30-year yield still moved back toward its recent peak near 5.34%.
The U.S. Treasury’s surprise decision to boost long-end buybacks briefly eased a global jump in long-term borrowing costs, but longer-dated Treasury yields rose again on Thursday as investors kept focusing on inflation and expanding government debt, according to Reuters.
The Treasury responded to U.S. long-bond yields reaching their highest level since 2007 by doubling buybacks to at least $4 billion per operation, a move analysts said was small relative to the roughly $32 trillion Treasury market but signaled heightened sensitivity to rising long rates.
Reuters reported that the 30-year yield fell nine basis points overnight, then rose again on Thursday. It was last up 5.4 bps at 5.249%, edging toward Tuesday’s 19-year high of 5.34%.
Investors also questioned whether policy influence is shifting between the Federal Reserve and the Treasury on credit conditions. Reuters said some analysts argued the intervention would likely be limited in impact over the long run, and the dollar edged up after the announcement, with the dollar index last at 98.832.
Latest closeDollar index 99.64 ▼0.3%