Treasury Boosts Long-Term Bond Buybacks Amid Rising Interest Rates
The US Treasury Department has announced an expansion of its buyback program for long-term government bonds. The program, which aims to enhance liquidity by purchasing and retiring aged government bonds, will now allow for at least $4 billion in purchases per operation, up from the previous cap of $2 billion.
The expanded program targets long-term bonds with remaining maturities of 10-20 years and 20-30 years. It is set to run from September 9 through November 4. The move comes as a response to rising long-term interest rates, which have been weighing on the US economy and fiscal management.
The announcement sent shockwaves through the foreign exchange market, causing the yen to briefly strengthen to the low-158 range against the dollar. This was seen as a direct result of the narrowing Japan-US interest rate differential, with investors buying up the yen in anticipation of lower long-term yields.