FX.co ★ US Yields Hold Pullback

The yield on the 10-year US Treasury note slipped to 4.65% on Wednesday, down from a 20‑month high of 4.75% in the prior session, after the US Treasury announced it would double the size of its buybacks of long‑dated securities. While the change only raised the cap on these operations to $4 billion, it reinforced the department’s broader effort to lean against elevated yields and reduce the market’s duration risk.

Additional measures included a coordinated action with Japan to support the yen by selling euros, instead of selling US Treasury notes and bonds, which had previously undercut Tokyo’s yen‑support operations. In parallel, Secretary Bessent urged the Federal Reserve to increase the capacity of its FIMA repo facility beyond the current $60 billion threshold, a move that would enable Japan to obtain dollar liquidity without liquidating its Treasury holdings.

US Treasury bonds sold off sharply in August as heavy AI‑related debt issuance, wider fiscal deficits, and persistent inflation risks pushed term‑premium estimates higher. At the same time, minutes from the latest FOMC meeting confirmed that some policymakers still see a case for further interest‑rate increases.