The yield on the 10-year US Treasury note climbed to 4.85% on Wednesday, its highest level since October 2023, after the Treasury Department announced it would triple the size of its buyback of notes and bonds scheduled for tomorrow. The department plans to purchase $6 billion in off-the-run securities, up from the $4 billion implied by Secretary Bessent’s earlier indication that buybacks would “at least double,” and marking one of several efforts by Washington to curb long-maturity yields.
Long-end yields have surged this year as elevated oil prices, driven by the war in Iran, have pushed up underlying inflation and increased the risk of an additional Federal Reserve rate hike in upcoming meetings. The move has been compounded by record corporate bond issuance, with AI-related companies alone bringing more than $1.5 trillion in new debt to market. Adding further upward pressure, weakness in the Japanese yen has led Tokyo to repeatedly sell US Treasuries to support its currency.