Treasury Buybacks Signal Shift in Long-Term Yield Sensitivity

The US Treasury has announced plans to increase purchases of Treasuries in certain maturity sectors. Starting from September, the Treasury will at least double its buys in the 10-to-20-year and 20-to-30 year maturity sectors, raising the purchase amount from $2 billion per operation to $4 billion or more. This move is part of the next Quarterly Refunding Announcement.

The increased purchases are seen as a signal that the Treasury is sensitive to elevated long-term yields. This sensitivity could have implications for monetary policy and interest rates in the coming months.

Separately, higher UK inflation has been largely driven by rising energy costs. However, Bank of England rate expectations may be too high, according to some analysts.