Asian Equities Rise After US Treasury Announces Long-Term Bond Buybacks
Asian equities advanced and global bond yields retreated after the US Treasury announced plans to buy back long-dated securities, offering temporary relief to markets strained by surging borrowing costs and geopolitical tensions.
Asian equities climbed, with the MSCI Asia Pacific gauge rising 0.8 percent, led by a 2 percent jump in South Korean shares. US equity-index futures also advanced in early Asian trading following a modest gain in the S&P 500.
The equity rally followed a sharp decline in long-term US borrowing costs. Yields on 30-year Treasuries dropped 10 basis points to 5.18 percent during the New York session after the US Treasury announced plans to increase buybacks of securities maturing between 10 and 30 years.
This maneuver effectively replaces longer-dated debt with short-term securities, resembling the Federal Reserve’s historical Operation Twist. It arrives after global long-dated government yields surged, with the US 30-year yield hitting its highest level since 2007 and recent Treasury auctions clearing at multi-year highs.
Market professionals view the intervention as a necessary response to deteriorating debt sentiment. Jack McIntyre, a portfolio manager at Brandywine Global Investment Management, stated that the administration needs a win by artificially containing long Treasury rates, adding that global sentiment on the long end is as bearish as he has seen in a very long time.
Corporate actions also buoyed regional markets. SK Hynix shares surged more than 5 percent after the South Korean memory-chip maker unveiled a 40 trillion won, or $29 billion, share buyback program. Meanwhile, gold climbed to approximately $4,515 an ounce, and Bitcoin rose to around $70,000 after President Donald Trump urged Congress to pass a key crypto bill.
Broader macroeconomic uncertainty persists alongside these market moves. Minutes from the latest Federal Reserve meeting revealed that several officials favored raising interest rates last month, with many open to further tightening if inflation fails to cool.
Inflation outlooks remain clouded by geopolitical friction. The minutes noted that "most participants anticipated that inflation would step down over the rest of the year as the effects of tariffs and earlier energy price increases wane, but many participants noted the possibility that inflation might be more persistently elevated." This coincides with President Trump announcing an unprecedented economic warfare operation against Iran.
