Stocks Climb as Treasury Steps In to Support Bonds: Markets Wrap
(Bloomberg) — Wall Street staged a rebound after the Treasury said it plans to boost buybacks of longer-dated bonds, a signal the US wants to lower borrowing costs after yields hit multi-decade highs.
A rally in 30-year bonds drove yields down by eight basis points to 5.20%. Most shares in the S&P 500 gained, but chipmakers dropped once again. The dollar hit the weakest level in three months. Bitcoin rallied the most since March. Oil climbed as traders weighed renewed tensions in the Middle East that further clouded the outlook for flows through the Strait of Hormuz.
Just two weeks after releasing its planned schedule for buybacks this quarter, the Treasury said it’s “increasing, by at least double, the size of liquidity support buyback operations” for securities dated from the 10-year to the 30-year sector.
“Long-end Treasuries are rallying after the US Treasury is taking another step to stem the rise in long rates,” said Peter Boockvar, author of The Boock Report. “I’m assuming this supply will be replaced by more issuance on the shorter end, particularly bills.”
If officials are in effect replacing longer-dated debt with bills, the operation amounts to a Treasury version of something the Federal Reserve has done repeatedly over the decades: an “Operation Twist.”
In case Fed Chair Kevin Warsh doesn’t recognize the buyback as a factor spurring an easing of financial conditions, George Saravelos at Deutsche Bank says he’d take it as a negative driver for the dollar.
Bonds had been jolted in recent days, with investors demanding more compensation to protect against inflation risks. The move was also fueled by a ramp-up of borrowing to fund the artificial-intelligence boom and waning demand from traditional buyers of long-dated maturities, just as the government’s nearly $2 trillion annual deficits keep pushing up the national debt.
“The intervention can help crowd in potential buyers tempted by the prior run-up in yields and force some near-term short-covering, while discouraging investors from going max short in the future for fear of being ambushed again,” said Krishna Guha at Evercore.
But the operation changes almost nothing in terms of fundamentals, and the increased size of the operations is modest relative to the flows in the Treasury market, he added.
The announcement may help ease near-term liquidity pressures and improve market functioning, but it does not address key factors driving yields such as government budget deficits, inflation expectations and Fed policy, according to Brian Therien at Edward Jones.
“Until investors gain greater clarity on those issues, risks to long-term Treasury yields remain skewed to the upside,” said Tony Miano at Wells Fargo Investment Institute.
Corporate Highlights:
Marvell Technology Inc. has agreed to give Alphabet Inc.’s Google rights to buy as much as $12.2 billion of its shares in exchange for purchasing chips. A personalized vaccine developed by Moderna Inc. and Merck & Co. reduced the recurrence of melanoma in a large, late-stage trial, raising expectations for treating the deadliest form of skin cancer and showing the promise of the embattled mRNA technology. Target Corp. lifted its full-year guidance after results outpaced estimates in the latest quarter, suggesting the big-box retailer may be moving past a lengthy sales slump. Estée Lauder Cos.’s results beat estimates and ended a run of three straight declines in annual revenue, a sign the beauty conglomerate’s turnaround efforts are gaining momentum. SK Hynix Inc. unveiled plans to buy back 40 trillion won ($29 billion) of shares and return more profits to investors, moving to stabilize its shares after they fell more than 50% in two months. Some of the main moves in markets:
Stocks
The S&P 500 rose 0.3% as of 1 p.m. New York time The Nasdaq 100 was little changed The Dow Jones Industrial Average rose 0.2% The MSCI World Index rose 0.2% Currencies
The Bloomberg Dollar Spot Index fell 0.7% The euro rose 0.8% to $1.1669 The British pound rose 0.6% to $1.3610 The Japanese yen rose 0.8% to 158.39 per dollar Cryptocurrencies
Bitcoin rose 6% to $68,449.18 Ether rose 9.2% to $2,088.81 Bonds
The yield on 10-year Treasuries declined five basis points to 4.66% Germany’s 10-year yield was little changed at 3.26% Britain’s 10-year yield declined four basis points to 5.04% Commodities
West Texas Intermediate crude rose 2.2% to $86.85 a barrel Spot gold rose 3.7% to $4,494.61 an ounce ©2026 Bloomberg L.P.
