Long-end UST Yields Drop After Increased Buyback Size

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August 20, 2026

Credit Ratings
Macro News

The US Treasury curve bull-flattened with the 10Y and 30Y easing by 5bp and 9bp respectively. This came after the US Treasury Dept. surprisingly announced larger buybacks of longer-dated nominal debt to ease borrowing pressures. The Treasury Dept. said it would “at least double” planned purchases of outstanding 10Y to 30Y Treasuries, raising the maximum size per operation from $2bn to at least $4bn. On the data front, total US public debt crossed $40tn for the first time, marking a roughly one-third increase in less than five years.

Separately, The FOMC released the minutes of its July meeting, with several officials saying further rate hikes may be needed if inflation does not continue moving toward the Fed’s 2% target. Fed Chairman Kevin Warsh also proposed reducing the number of annual FOMC meetings from eight to six, arguing that fewer meetings would give policymakers more time to assess incoming data. Separately, Trump warned of an “unprecedented” economic campaign against Iran, saying countries providing a “lifeline” to Tehran, could face “tremendous economic consequences.”

Looking at equity markets, the S&P and Nasdaq both rose by 0.2%. US IG CDS spreads were 0.7bp tighter, while HY CDS spreads tightened by 4.2bp. European equity markets ended mixed. European IG CDS spreads were 3.1bp tighter, and Crossover spreads tightened by 3.3bp. Asian equity markets have opened broadly higher this morning. Asia ex-Japan CDS spreads tightened by 0.2bp.

Rating Changes

Term of the Day: Kangaroo Bonds

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Talking Heads

On Investors See 10-Year Treasury Yields at 5% Hurting EM Asia Debt – Rajeev De Mello, Gama Asset Management

“I am concerned about a potential breach in the psychological level of 5% on the US 10-year and on the speed of the movement… as US, European and Japan bond yields rise, their investors could repatriate funds and invest them in their home markets.”

On Credibility Risk in Treasury’s Buybacks – JP Morgan

“Absent real fiscal consolidation, we fear the markets will view this action as lacking credibility… This could contribute to higher term premium and yields over time should Treasury become more opportunistic in its approach to debt management and move further away from its ‘regular and predictable’ tenet.”

On Bessent’s Bond Buyback Push Carries a Dollar Cost – Citi

“The main price to pay for lowering rates in such a way is a weaker currency”

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