What happened?
Treasury Secretary Scott Bessent announced on Wednesday that the US Treasury would at least double the size of its government debt buybacks, starting September 9 and running through November 4.
The move initially pushed yields lower. The yield on the 30-year Treasury fell about 10 basis points after earlier reaching its highest level in about 19 years.
However, that decline quickly reversed on Thursday as investors assessed the intervention and the longer-term pressures facing the US bond market.
Where are yields now?
The 30-year Treasury yield, the main focus of the accelerated buyback, rose 5.7 basis points to 5.251%.
The 10-year Treasury yield, a key benchmark for mortgages, auto loans and credit card debt, climbed 5.1 basis points to 4.704%. The 2-year Treasury yield rose 1.5 basis points to 4.1927%.
One basis point equals 0.01%, or 1/100th of 1%. Bond yields and prices move in opposite directions.
Why are yields under pressure?
The intervention comes as the US debt market faces several structural pressures. The national debt has crossed $40 trillion, while record corporate debt issuance linked to the artificial intelligence buildout is adding competition for investors’ money.These factors have contributed to higher term premiums — the additional yield investors demand to hold US government debt.
What does the Federal Reserve have to do with it?
Investors were also digesting minutes from the Federal Open Market Committee’s July meeting, released Wednesday.
Officials indicated that higher interest rates could be needed if there is not more progress on inflation. Recent economic data has shown modest monthly price increases, but inflation remains above the Federal Reserve’s 2% target.
Thursday’s economic calendar includes weekly jobless claims and the Philadelphia Fed’s monthly manufacturing survey.
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(Edited by : Gareema Bangad)
