Treasuries saw extended gains following US plans to increase bond buybacks, which in turn lifted Asian bonds and stocks. The 30-year US Treasury yield fell by one basis point to 5.18%, building on a nine-basis-point drop from the previous day. The benchmark 10-year yield also decreased by a similar amount to 4.63%, extending a six-basis-point decline. A Bloomberg index tracking Treasuries due in 20 years and above surged by 1.7% on Wednesday, marking its largest one-day gain since February 2025.
Bonds in Japan, Australia, and New Zealand also saw rises after the US Treasury announced it would at least double the size of its bond buyback operations. This move is aimed at reducing yields on long-term bonds that had climbed to multi-decade highs. Sentiment improved, leading MSCI’s Asia Pacific equities gauge to rise by 1.7%, breaking a two-day losing streak. US equity-index futures also advanced, although European shares were projected to open lower. South Korea's Kospi Index jumped 6%, with SK Hynix Inc. surging 13% due to its own share buyback plan and Samsung Electronics Co. rising over 5%.
Global bonds had been unsettled recently as investors sought increased compensation for inflation risks and rising government debt levels, compounded by Middle East tensions adding to price pressures. The selloff, which also affected stocks, was exacerbated by corporate borrowing for the artificial intelligence boom. Gerald Gan, chief investment officer at Reed Capital, commented that the buyback suggests the US Treasury is highly concerned about long-term borrowing costs, but believes the effect will be temporary and unsustainable.
US equity-index futures advanced in Asian trading, following a modest gain in the S&P 500 Index on Tuesday despite a decline in chipmakers. Contracts for the Nasdaq 100 Index rose by 0.4%. The dollar remained largely unchanged in Asia after dropping 0.8% on Wednesday to its lowest level since May, as Treasury yields declined. Lloyd Chan, a foreign-exchange strategist at MUFG Bank in Singapore, noted that while buybacks alone might not alter long-term fundamentals, they signal policymakers' willingness to counter further yield increases, suggesting the relative-rate story supporting the dollar is fading. Mark Cranfield, Markets Live Strategist, added that the dollar is emerging as a weak link, providing room for Asian currencies to strengthen.
