US Treasury’s $4 billion bond buyback expansion weighs on the USD as markets question its yield-suppression impact.
The US Dollar Index (DXY) fell to near 98.80 in Asian trading, approaching three-month lows. The decline follows the US Treasury’s announcement to double its long-end bond buybacks to $4 billion per operation, aiming to curb rising 30-year yields.
Markets reacted skeptically to the move, with yields showing limited response while the dollar weakened. The Treasury had previously surprised investors by pledging to at least double buybacks of longer-dated debt. Analysts noted the strategy’s limited success in suppressing yields but its negative effect on the dollar.
Fed rate hike expectations softened, with markets pricing a 41% chance of a hike at the next meeting, down from 47% a month earlier. Inflation data has shown signs of easing, though some Fed officials demand more evidence of receding price pressures.