A U.S. Treasury plan to expand long-term bond buybacks gave markets only a short-lived lift. By Thursday before the U.S. open, the initial improvement in sentiment had faded, long-dated Treasuries were selling off again, oil was higher, and inflation concerns had moved back into focus.
Nasdaq 100 futures widened losses to 0.5% in premarket trading. Earlier in the session, memory-chip names had broadly advanced, with SK Hynix up about 5%, SanDisk up about 3%, Western Digital up about 2%, Micron Technology up about 2%, and Seagate Technology up about 2%. SK Hynix and Samsung Electronics later announced large shareholder return plans totaling KRW 140 trillion, helping ignite South Korea’s stock market. Japan’s Nikkei 225 closed up 1.4% at 66,216.79, while South Korea’s Kospi closed up 5.9% at 6,852.58.
Treasury expands long-bond buybacks as yields stay elevated
The U.S. Treasury said it will at least double the scale of its long-term bond buyback program, a move intended to restrain long-end yields after they climbed to multi-decade highs in recent sessions.
Earlier this week, long-dated U.S. Treasury yields surged. The 30-year yield touched its highest level since 2007, while last week’s 10-year Treasury auction cleared at the highest funding cost since 2007. The stop-out yield at the 30-year auction reached its highest level since 2001.
The announcement initially drove a strong market reaction. Bloomberg’s index tracking U.S. Treasuries with maturities of 20 years or more rose 1.7% on Wednesday, the biggest one-day gain since February 2025. Government bond prices in Japan, Australia and New Zealand also climbed in response. That rebound did not last. On Thursday, long-dated Treasuries extended losses again, with the 30-year yield rising 6 basis points to 5.25%.
Some market participants compared the buyback plan with the Federal Reserve’s Operation Twist. The Treasury has not explained where the buyback funding will come from, though it typically relies on short-dated Treasury bills to meet floating funding needs. If authorities are effectively replacing long-term debt with short-term issuance, the mechanics would resemble Operation Twist.
Jack McIntyre, a portfolio manager at Brandywine Global Investment Management, said: 「This administration needs a win, and perhaps this is how they get one by artificially suppressing long-term Treasury rates.」 He added: 「The pessimism in the global long-end market is as bad as I have seen in a long time. They had to do something.」
Doubts remain over durability, while the dollar narrative shifts
Even with the short-term improvement in tone, several analysts remained cautious about the staying power of the buyback plan.
Gerald Gan, chief investment officer at Reed Capital, said: 「The buyback plan makes me think the U.S. Treasury is extremely worried about long-term borrowing costs. But just like intervention in the yen, the effect is temporary, and buybacks cannot go on for very long.」
In foreign exchange, the Bloomberg Dollar Spot Index edged up 0.1% in Asian trading after falling 0.8% a day earlier to its lowest level since May. The euro rose 0.1% to 1.1687 against the dollar, the highest since May 14.
Lloyd Chan, a Singapore-based FX strategist at MUFG Bank, wrote in a note: 「Buybacks alone are unlikely to alter longer-term fundamentals, but they do signal that policymakers are inclined to resist further upside in yields. That means the relative-rate logic that had supported the dollar is fading.」
Bloomberg market strategist Mark Cranfield also said the dollar was becoming the weakest link for investors weighing Treasury buybacks against a persistently expanding U.S. fiscal deficit, leaving room for further gains in Asian currencies.
Oil and gold diverge as drivers of the bond selloff remain in place
The report said the underlying causes behind the bond-market turmoil have not gone away. Global bond markets have been under pressure as investors demand greater compensation for inflation risk and rising government debt levels. Tensions in the Middle East have added to price pressure, while a burst of corporate bond issuance tied to financing the artificial intelligence boom has intensified the selloff.
Commodity prices moved in different directions. WTI crude rose 3% to $86.94 a barrel, and Brent crude added 2.6% to $94.10. The article also said Brent was up 0.4% to about $92 a barrel. Trump had earlier said he would launch an 「unprecedented economic war」 against Iran and accused Tehran of missing the chance to reach a deal with him, which the report said supported oil through a geopolitical risk premium.
Precious metals retreated. Spot gold fell 1.0% to $4,477.33 an ounce, while spot silver dropped 1.0% to $66.3 an ounce. The article also said gold had slipped 0.8% to about $4,480 an ounce after rising to its highest level since early June.
In crypto markets, Bitcoin rose above $69,300. The report said the move followed Trump’s meeting with crypto industry executives at the White House and his push for Congress to advance related legislation.