The Treasury’s decision to more than double its long-dated bond buybacks is the standout policy move of the week, and markets treated it that way. An 8 to 9 basis point pullback in 30-year yields within hours of the announcement is a significant repricing for a market that had been under sustained, multi-week pressure, and it shows the Treasury is willing to actively intervene rather than let the bond selloff run. The dollar’s slide to a three-month low is a direct read-through of that intervention easing financial conditions just as the hawkish FOMC minutes might (subsequent data had dated them somewhat) otherwise have supported the greenback. Equities took their cue from the bond market rather than the Fed minutes, with the S&P and Dow both closing higher and chip stocks the notable holdout, still weighed down by AI capex concerns that the buyback news did nothing to resolve.
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Giuseppe was all over this big news as it happened:
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A Treasury pledge to double its long-dated bond buybacks calmed a multi-decade yield spike, sank the dollar to a three-month low, and helped Wall Street snap a three-day losing streak, even as chip stocks stayed under pressure.
Summary:
- The US Treasury said it will more than double its long-dated bond buybacks, from $2 billion to at least $4 billion, targeting the 10-20 year and 20-30 year portions of the curve
- The move followed a selloff that had pushed 30-year Treasury yields to around 5.19 to 5.21%, their highest level since 2007
- Yields pulled back 8 to 9 basis points on the announcement, and the US dollar fell to its weakest level in roughly three months
- The Dow Jones Industrial Average and S&P 500 both closed up about 0.2%, while the Nasdaq Composite added around 0.16%, snapping a three-day losing streak
- Moderna shares surged as much as 176% after a late-stage melanoma vaccine trial developed with Merck showed positive results, with Merck shares also rising
- Chip stocks remained a laggard, weighed down by elevated yields and ongoing concerns over AI capital expenditure even as the broader market rallied
- SK Hynix announced a buyback and cancellation program worth around $28.6 billion in treasury shares, tied to its 2025-2027 capital return plan
Wall Street snapped a three-day losing streak on Wednesday after the US Treasury Department moved to calm a bond market that had pushed long-dated yields to their highest levels in nearly two decades. The dollar fell to its weakest point in roughly three months as a result, while equities staged a broad, if uneven, rally into the close.
The Treasury said it would more than double the size of its buybacks of longer-dated government debt, lifting the maximum from $2 billion to at least $4 billion, with the operation targeting the 10 to 20 year and 20 to 30 year segments of the curve. The intervention came after weeks of pressure on that part of the market, which had seen 30-year Treasury yields climb as high as 5.19 to 5.21%, their highest level since 2007. Following the announcement, yields retreated 8 to 9 basis points, offering some relief to a market that had effectively seen a buyers’ strike on longer maturities since late June.
The Dow Jones Industrial Average and S&P 500 each closed roughly 0.2% higher, while the Nasdaq Composite added about 0.16%, according to Yahoo Finance. The gains were not evenly distributed. Moderna was the session’s standout performer, with shares surging as much as 176% after the company reported positive results from a late-stage trial of a melanoma vaccine developed jointly with Merck. Merck shares also rose sharply on the news. By contrast, chip stocks remained under pressure, weighed down by the elevated yield environment and lingering investor unease over the scale of capital spending tied to artificial intelligence infrastructure, a dynamic that persisted even as the broader market found its footing.
Adding to the day’s corporate news out of the semiconductor space, South Korea’s SK Hynix announced it would buy back and cancel roughly $28.6 billion worth of treasury shares as part of a broader 2025 to 2027 capital return plan, under which the company said it would direct at least half of its free cash flow generated over that period back to shareholders. The announcement offered a rare bright spot for chip sentiment on a day when the sector otherwise lagged the wider market. Looking ahead, traders will be watching whether the Treasury’s intervention proves durable enough to hold long-end yields lower, or whether the underlying pressures that drove the selloff, including elevated government borrowing and an AI-driven spending boom, reassert themselves in the sessions ahead.
This article was written by Eamonn Sheridan at investinglive.com.