Key facts
- US Treasury plans to boost buybacks of longer-dated bonds to lower borrowing costs.
- 30-year Treasury yields fell 10 basis points to 5.18% following the announcement.
- The dollar reached a three-month low, while gold climbed to a multi-month high.
- Oil prices advanced amid Middle East tensions, with Brent crude at $91.45 a barrel.
- Asian bonds and Treasuries had previously extended declines due to debt concerns and inflation fears.
Asian stocks are expected to rebound, following a broad rally on Wall Street, after US officials indicated plans to increase buybacks of longer-dated Treasuries. This move aims to ease borrowing costs, which had surged to near multi-decade highs. The intervention saw 30-year Treasury yields fall by 10 basis points to 5.18% during the New York session, contributing to a three-month low for the dollar. Gold prices climbed to their highest level since early June as yields declined.
Earlier in the week, Treasuries and Asian bonds had extended their declines, pressured by concerns over US government spending and a significant volume of debt issuance. This led to a rise in US 30-year yields to 5.32%, a level not seen since June 2007, and a climb in Japan's 10-year yields to multi-decade highs amid a global bond selloff. Bonds in Australia and New Zealand also dropped.
Oil prices advanced, with US futures near $85 a barrel and global benchmark Brent rising 0.6% to $91.45. This increase was fueled by dimming prospects for peace in the Middle East, reviving concerns that prolonged geopolitical tensions could threaten supply. Fighting in Lebanon and comments from President Donald Trump regarding Iran contributed to these fears, raising questions about the reopening of the Strait of Hormuz and stoking inflation concerns.
Bitcoin also saw a jump, reportedly as President Donald Trump urged Congress to pass a key cryptocurrency bill while the White House hosted industry executives. Meanwhile, borrowing costs in Europe saw significant increases, with French yields hitting their highest since 2008, German yields trading at 2011 levels, and UK gilt yields approaching 6%.