US Treasury doubles long-bond buybacks, sending long-term yields lower

The Treasury lifted its liquidity-support buybacks to at least $4 billion per operation from $2 billion, pushing the 10-year yield to 4.651%; the S&P 500 rose 0.22% to 7,708 while the Nasdaq 100 slipped 0.22%.

Deepakshi

Kristal Research & Marketing team

20 Aug2 min

Key takeaways — AI summary

The US Treasury said it will at least double its liquidity-support buyback operations for older long-dated bonds to at least $4 billion each from $2 billion; long yields fell immediately, with the 10-year at 4.651%, the 20-year at 5.184% and the 30-year at 5.195%, and the dollar had its weakest close since May.
ING cautioned the buybacks are not Fed money-printing but a zero-sum smoothing of illiquidity that leaves total debt outstanding unchanged and is unlikely to shift the direction of long yields on their own.
Sectors split sharply: the S&P 500 rose 0.22% to 7,708 and the Dow 0.22% to 53,468, but the Nasdaq 100 fell 0.22% to 29,426; health care jumped 3.52% (Moderna +165% on a Merck melanoma-vaccine trial in over 1,100 patients) while semiconductors fell about 2% and memory names dropped 3-6%.
Morgan Stanley described a 'de-grossing tape, not a risk-off tape,' and Goldman Sachs said systematic long-short funds lost 1.4%, their worst session in over two years.
In other developments: July Fed minutes showed three officials wanted higher rates; a $16 billion 20-year auction cleared poorly at 5.204%; US crude settled at $84.39 and Brent at $91.62; gold hit an eleven-week high; and reports emerged the US will cut tariffs on Canadian steel and aluminium to 25% from 50%, hitting domestic steelmakers.

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