U.S. Treasury’s plan to double bond buybacks to at least 4 billion Dollars triggers dollar selloff and long-yield decline.
The Dollar Index fell 0.86% to 98.79 on Wednesday, its lowest close since mid-May, after the Treasury announced a near-term doubling of its liquidity support buyback operations. The move, effective September 9 through November 4, increases each operation from 2 billion Dollars to at least 4 billion in 10-to-30-year nominal coupons, disrupting a schedule published just two weeks prior.
The announcement preceded a 16 billion Dollar auction of 20-year bonds, pressuring long yields lower. The 30-year yield, which hit 5.33% on August 18, retreated nearly 10 basis points, while the 10-year yield eased toward 4.65%. The Treasury’s intervention as a bidder, rather than disinflation, drove the currency’s decline.
The foreign exchange market reacted sharply, pricing the distinction between yield declines from policy shifts versus issuer demand. The index closed below its 200-day Exponential Moving Average, signaling broader weakness.