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Bond Market News
US Treasuries Reverse the Upmove
August 21, 2026
US Treasury yields inched higher by 3–7bp across the curve, reversing yesterday’s move. Analysts noted that while the US Treasury’s buyback programme size increased, it’s impact may be short-lived. On the data front, Initial Jobless Claims for the week came-in at 206K, lower than expectations of 210K and prior week’s 209K print. Separately, St. Louis Fed President Musalem attributed the bond selloff to heavy government borrowing and AI financing demand, saying “Fed credibility is not in question”. San Francisco’s Fed Mary Daly also suggested that the Treasury market signalled that the Fed’s monetary policy is in good shape currently.
Looking at equity markets, the S&P and Nasdaq fell by 0.9% and 1.0% respectively. US IG CDS spreads were 0.4bp wider, while HY CDS spreads widened by 3.3bp. European equity markets ended lower as well. European IG CDS spreads were 0.5bp wider, and Crossover spreads widened by 4.1bp. Asian equity markets have opened mixed this morning. Asia ex-Japan CDS spreads tightened by 0.1bp.
Rating Changes
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Tapestry Inc. Upgraded To ‘BBB+’ From ‘BBB’ On Strong Growth Trends; Outlook Stable
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Corporación Quiport S.A. Upgraded To ‘B+’ Following Sovereign Upgrade; Outlook Stable
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Fitch Removes the Negative Watch and Affirms Cosan’s IDRs at ‘BB-‘; Outlook Negative
Term of the Day: Blue Bonds
Blue bonds are a type of sustainable debt wherein the proceeds from such issuance are earmarked for marine/water projects related to ocean conservation (hence the name blue bonds). These are similar to green bonds, which are earmarked for green or environmentally-friendly projects. Blue bonds became popular in late 2018 when Seychelles issued the world’s first sovereign blue bond.
Talking Heads
On EM Currencies Mixed as Treasury Buyback Lift Proves Short-Lived – Win Tin, Bank of Nassau 1982
“The Treasury should not be in the business of trying to flatten the yield curve… I wonder whether Bessent played his hand too early. The markets now have a line in the sand that was drawn yesterday and they will surely test it.”
On Dollar After Warning on US Buyback Risk – Citi
“The newest development is the recent announcement by US Treasury to double the size of its buybacks through November… This adds another bearish element to the USD through two channels: it pushes US yields down, and it creates concerns around financial repression.”
On Asian Bonds Follow Treasuries Lower – Bloomberg
“Japanese long-bond yields will have an upward trajectory as the influence from Treasuries will mean more to traders than Japan’s inflation data. Moreover, investors will be more interested in next week’s Tokyo CPI reading that will give a more timely inflation update before the September BOJ meeting.”
Top Gainers and Losers- 21-Aug-26*
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