Long-maturity Treasury yields rebounded on Thursday, fully reversing the decline that followed the Treasury Department’s announcement of an expanded bond and note buyback program. The 10-year Treasury yield climbed to 4.7%, just 5 basis points below this week’s 20-month high, while the 30-year yield rose to 5.25%.
The Treasury said it will at least double its long-maturity buybacks to $4 billion next quarter, reinforcing its efforts to compress yields. These measures come on top of the recent joint intervention in the Japanese yen via euro sales, as well as the Treasury’s request for the Federal Reserve to raise the cap on its FIMA (Foreign and International Monetary Authorities) facility.
Yields at the long end of the curve have been climbing since July, driven by a surge in debt issuance from AI-related companies and increased deficit spending by the federal government. Long-term yields also moved higher after Fed Chair Warsh indicated that raising policy rates might not be his preferred instrument for tackling elevated inflation.
Fears that inflation expectations could become unanchored were further intensified by higher energy prices amid the US–Iran blockade of oil tankers in the Persian Gulf.
