New york: Global markets experienced an upswing as easing pressures in the bond markets led to positive price movements. This followed the US Treasury's announcement of an increase in the size of its long-term bond buyback operations. The announcement came as a relief after sustained pressure earlier in the week, driven by concerns over sovereign debt and tech companies' borrowing for AI investments.
According to Anadolu Agency, the US Treasury's decision to double the buyback size for long-term securities, from $2 billion to at least $4 billion, aimed to alleviate borrowing costs and improve risk appetite in the markets. Although not a form of monetary easing or yield curve control, this move signals the readiness of US policymakers to counter rising term premiums.
The announcement had an immediate effect on the bond market, with the yield on the 10-year US Treasury note dropping eight basis points to 4.64%, and the 30-year yield declining by 10 basis points to 5.19%. These changes helped stabilize the market after reaching their highest levels in 19 years earlier in the week.
In the US, the Federal Reserve's July meeting minutes revealed a split among officials over the need to tighten monetary policy if inflation persists. Despite dissent from three members, the federal funds rate remained unchanged. Meanwhile, US public debt has crossed $40 trillion, driven by increased government borrowing and the fiscal legacy of COVID-19 measures.
Geopolitical developments also influenced market sentiment. US President Donald Trump claimed control over the Strait of Hormuz and hinted at potential talks with Iran, though tensions remained high, keeping oil prices elevated. Brent crude for October delivery edged up to $91.70 a barrel.
The weakening US dollar and falling bond yields boosted gold prices, which rose to $4,523 per ounce. Strong corporate earnings, particularly from Moderna following successful vaccine trials, bolstered US stock markets, with all major indices closing higher.
In Europe, market sentiment remained cautious due to persistent high oil prices. ECB President Christine Lagarde highlighted the impact of global trade restrictions and energy costs on Europe's growth model. Inflation in the eurozone and UK rose in July, prompting speculation about potential rate hikes by the ECB and BoE.
Asian markets followed the positive trend, with notable gains in South Korea after SK Hynix announced a significant share buyback. The PBoC maintained its lending rates in China, while Japan reported a trade deficit below expectations, contributing to gains in Asian equities.
Overall, the easing of bond market pressures and strategic policy signals from the US Treasury have bolstered global market confidence, setting a positive tone across various regions.