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Dollar pressured after Treasury boosts long bond buyback program

The Treasury doubled the scale of its long-term bond buyback plan, while EUR/USD moved above 1.17 amid the 30-year yield topping 5.32%.

Reported · Written up by our desk · Major Pairs

A sharp rise in US Treasury yields triggered a sell-off across sovereign bond markets and, later in the week, drew attention to Washington’s effort to stabilize the bond market, which also weighed on the US dollar, according to Action Forex.

At the start of the week, the 30-year US Treasury yield climbed to 5.32%, its highest level since 2007, and the 10-year yield rose to 4.74%. The sell-off spread to government bonds in Australia, New Zealand, and Japan, with investors pointing to concerns over record public debt, rising US government spending, and the large supply of long-dated Treasuries.

Rising oil prices added to pressure on bonds and increased uncertainty around the Federal Reserve’s policy outlook, Action Forex said. Brent crude moved above USD 90 per barrel as tensions in the Middle East intensified, including uncertainty tied to the Strait of Hormuz.

In response, the Treasury doubled the scale of its long-term bond buyback programme, Action Forex reported. The intervention helped stabilize bonds but pushed EUR/USD above 1.17, as markets increasingly treated a weaker dollar as the downside trade-off for lower Treasury stress.

Latest closeWTI crude $82.40 ▲1.4%|Brent $88.59 ▲1.8%|EUR/USD 1.157 ▲0.4%

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