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US 10-year yield edges higher after Treasury doubles long-dated buybacks

The Treasury said it will raise 10 to 30 year buyback operations starting Sept. 9 to at least $4 billion from $2 billion, easing a prior yield surge.

Reported · Written up by our desk · Government Bonds

US Treasury yields steadied on Thursday as the US 10-year note edged higher to 4.672% after hitting 4.635% the prior day, according to FXStreet. The report links the stabilization in long-end rates to the Treasury’s recent surprise decision on long-dated debt buybacks.

The US Department of the Treasury announced on Wednesday that, starting Sept. 9, it will double the size of its liquidity-support buyback operations for maturities from 10 to 30 years, increasing them from $2 billion to at least $4 billion per operation. The announcement interrupted a recent climb that had pushed the 10-year yield close to 4.75% on Tuesday and lifted the 30-year yield toward its highest levels since 2007.

FXStreet notes ING’s view that the timing stands out because the Treasury published its quarterly buyback schedule only two weeks earlier. ING said the move could indicate authorities are closely watching long-term yields and are prepared to act, while also arguing the $4 billion scale is small relative to issuance and total debt outstanding.

The piece also highlights that the buybacks are not expected to provide a structural shift in bond demand, since the operations still require the bonds to be refinanced. Separately, it said the US Dollar remains under pressure despite more hawkish Fed Minutes, with the US Dollar Index down 0.1% to 98.70 at the time of writing.

Latest closeDollar index 99.64 ▼0.3%

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