Global yields fall after US Treasury boosts debt buybacks

Longer-dated bond yields in the global market fell after the U.S. Treasury Department announced it would increase liquidity support for longer-dated securities, following a broad sell-off driven by concerns about mounting sovereign debt. The U.S. Treasury Department doubled the size of buyback operations for nominal coupon securities, with operations now at least $4 billion per operation from $2 billion.

As a result, U.S. long-dated government yields dropped by up to 10 basis points, causing European government bond yields to decline as well. The U.S. long bonds had reached their highest level in nearly 20 years, reflecting growing worries about inflation and high debt. This shift in yields had a ripple effect on other financial markets, lifting stocks and sending the dollar and cryptocurrency prices higher, while gold also experienced a significant increase.

The dollar index weakened against other major currencies, while Bitcoin and Ethereum saw notable gains. However, the retreat in yields raised concerns about the U.S. debt trajectory, as higher borrowing costs could potentially impact global debt markets reliant on low rates. Fed policymakers expressed growing concern about inflation, with some calling for interest rate hikes if inflation fails to retreat to the central bank's 2% target.