After the government announced a $6 billion (€5.2 billion) bond buyback on Wednesday, yields on long-term US Treasury bonds skyrocketed, surprising investors who had anticipated a more significant intervention.
After a brief decline, the yield on the benchmark 10-year Treasury note rose above 4.85%, reaching its highest level in almost three years. The 30-year bond’s yield increased to 5.29% from 5.26% the day before. In August, it hit its highest level since 2007 at 5.33%.
Treasury yields have an impact on interest rates throughout the US economy, thus long-term increases may raise the cost of corporate loans, mortgages, and other types of borrowing. Higher borrowing rates can also hurt share values and hinder economic growth.
The increase followed the Treasury Department’s announcement on Thursday that it would repurchase up to $6 billion in bonds that matured in ten to twenty years. This is three times larger than its last, long-running buyback program.
The action is a component of a strategy to promote bond market liquidity that Treasury Secretary Scott Bessent unveiled last month. As the US-Iran battle intensified, Brent crude surged above $100 a barrel for the first time since late July, driving up yields.
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