U.S. Treasury's Buyback Move Signals Unease About Rising Yields
Dow Jones
Aug 20
0539 GMT - The U.S. Treasury's unexpected buyback announcement on Wednesday is a sign of increasing administration unease regarding the ongoing rise in long-end U.S. Treasury yields, says Deutsche Bank's George Saravelos in a note. The Treasury said it will buy back more of its longer-term bonds, raising the current maximum size of $2 billion per operation to at least $4 billion per operation. Also, the new buyback will target longer-dated nominal coupon securities with maturities of 10 years and longer. Saravelos says the buyback operation is effectively very similar to the Federal Reserve's 'Operation Twist', a Federal Reserve monetary policy that involved the simultaneous sale of short-term Treasury securities and the purchase of long-term ones.
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