The yield on the 10-year US Treasury note climbed toward 4.85% on Wednesday, the highest level since October 2023, after the Treasury Department announced it would triple the size of its buyback of notes and bonds scheduled for tomorrow. The department plans to purchase $6 billion in off-the-run securities, up from the previously indicated amount of at least $4 billion, as Secretary Bessent had signaled among a series of measures from Washington aimed at putting downward pressure on long-maturity yields.
Yields at the long end of the curve have surged this year, driven in part by higher oil prices linked to the war involving Iran, which have pushed up underlying inflation and raised the risk of a Federal Reserve rate hike at upcoming meetings. The move has been compounded by record corporate borrowing, with AI-related companies alone issuing more than $1.5 trillion in new debt. In addition, sustained pressure on the Japanese yen prompted Tokyo to repeatedly sell US Treasuries to support its currency.
Even so, 10-year yields later pared some of their earlier increase after a new auction cleared 1.5 basis points through the when-issued yield.
