Dollar Weakened as Treasury Buybacks Ease Pressure on Long-End Yields

US Treasury Secretary Bessent's announcement of a major expansion of long-dated Treasury buyback operations has caused the US Dollar to weaken. According to Lloyd Chan from MUFG, this move is aimed at easing pressure from rising long-end yields.

The decision to expand these buybacks signals policymakers' willingness to lean against further yield increases. This suggests that the relative-rate story supporting the dollar's strength is fading.

Moderating Fed tightening expectations and Treasury efforts to contain long-end yields are likely to continue capping dollar upside, making a renewed sustained Dollar rally harder without higher US inflation or yields.