Dollar Hits Three-Month Lows as Treasury Intervenes in Bond Market Rout

The US dollar fell to three-month lows on Thursday after the Treasury Department intervened in the bond market, calming a rout that had pushed long-end yields to their highest since 2007. The dollar index, which measures the greenback against six other currencies, stood at 98.854, its lowest level since mid-May.

Investors have been grappling with a sharp selloff in global bonds due to concerns about soaring government debt and higher oil prices resulting from the ongoing US-Israeli conflict with Iran. The 30-year Treasury yield rose to a 19-year high of 5.337% earlier this week, prompting the Treasury's move.

The Treasury plans to double liquidity support buyback operations for longer-dated bonds, effectively shifting more government borrowing towards short-term bills while buying back longer-dated debt. This move is seen as a bid to ease pressure on the long end of the curve without expanding the Federal Reserve's balance sheet.