From Marc Chandler at Bannockburn Global Forex:
The US Treasury announcement early in North America yesterday that it would at least double the size of liquidity support buyback operations for longer-dated nominal coupon securities. The current maximum size is $16 bln a quarter. The stepped-up purchases will take effect on September 9. Treasury will provide more information about future buyback sizes at the next quarterly refunding, announcement scheduled for November 4, 2026. The announcement changed the tone of the capital markets. We suspect the timing and signal effect is more potent than the actual size relative to the daily turnover in the US Treasury market. It drove down long-term US yields, fueled a recovery in equities, and sent the greenback reeling.
The US 10- and 30-year yields are a couple of basis points firmer today, but the US dollar is softer against most currencies today. While Asia Pacific markets were pulled higher today by yesterday’s action, European markets are seeing little follow-through, and the Stoxx 600 is struggling to sustain upticks with a six-day drop in tow. Meanwhile, October WTI has advanced more than 2.5%, and is extending its rally for the fifth consecutive session and near $86.60 is at its highest level in a month....
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