A trader works on the floor of the New York Stock Exchange.
NYSE
Bond yields climbed on Thursday, coming back from the pullback they saw the previous day after the Treasury Department announced an intervention aimed at easing pressure on longer-dated government debt
Yields on 10-year U.S. Treasurys — the main benchmark for mortgages, auto loans and credit card debt — moved more than 5 basis points higher to 4.704%. The yield level was above the level it held before the 8:30 a.m. announcement Wednesday that Treasury would be stepping up its bond buyback program
The yield on the 30-year U.S. Treasury bond — the primary focus of the accelerated buyback — was up more than 5 basis points at 5.248%
The yield on the 2-year Treasury note, which more closely follows short-term Federal Reserve rate decisions, was last seen up less than 1 basis point at 4.185%
One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another
The moves underscored the difficulty of market interventions, particularly at a time when U.S. debt faces a slew of factors that have been pressuring yields higher
In a move announced Wednesday morning, the Treasury Department, led by Secretary Scott Bessent, said it would at least double the size of its government debt buybacks, starting Sept. 9 and running through Nov. 4
Yields tumbled following the announcement, with the 30-year down about 10 basis points after previously hitting its highest in about 19 years, predating the global financial crisis in 2008
However, the trade quickly unwound, with yields higher Thursday as the market digested the move as well as the longer-term structural problems facing the fixed income market
Later that day, Bessent said that the buyback operation could end up being more than the $4 billion that was announced
The interventions “belie the underlying structural challenges and do nothing to address them,” Maia Crook, senior research analyst at JPMorgan Chase, said in a client note. “While [Wednesday’s] action forced some decline in longer-dated yields, the more lasting impact is the potential for higher risk premia reflecting a Treasury Department that is intervening in the market and moving away from its ‘regular and predictable’ tenet.”
The announcement came the same day that Treasury updated the national debt total, which pushed past the $40 trillion mark. At the same time, the market has faced stiff competition from record corporate debt issuance tied to the artificial intelligence build-out, all of which has contributed to rising term premiums, or the extra yield investors demand to hold U.S. government paper
Traders were also digesting the latest Federal Open Market Committee minutes from July, released Wednesday. Officials at the meeting indicated that higher interest rates likely would be needed if there isn’t more progress on inflation. Economic data released since the meeting has shown modest monthly price increases, though inflation remains above the Fed’s 2% target
On Thursday, the Philadelphia Fed’s manufacturing index posted its highest reading since April 2021
