US Treasury yields extended their rebound following the announcement of a bond buyback by the US Department of the Treasury, with yields rising across the curve despite the supportive effect of increased Treasury purchases. The 2-year Treasury yield, which is highly sensitive to changes in the Federal Reserve's policy rate, rose by five basis points to 4.24%. The 10-year benchmark note increased by nearly three basis points to 4.474%, while the 30-year bond yield ended the week at 5.276%, up 2.5 basis points. This yield movement occurred even as the Treasury announced an increase in long-end purchases from $2 billion to $4 billion, indicating that market forces outweighed the buyback's downward pressure on yields [1].
The rise in yields was attributed to robust US economic data, specifically the S&P Global Services PMI for August, which improved and beat estimates. This strong services sector performance offset concerns about a slowdown in manufacturing, where moderate growth was observed. Factory prices have been affected by disruptions stemming from the US-Iran war, leading to higher energy costs [1].
Looking ahead, market participants are focusing on several upcoming events: Treasury Secretary Bessent's announcement of Iranian sanctions on Monday, the release of the US PCE report, BLS preliminary benchmark revisions, and remarks from Fed Chair Warsh at the Jackson Hole symposium. Despite the yield increases, the US Dollar Index (DXY) remained largely unchanged, down just 0.02% at 98.84 [1].
CONCLUSION
US Treasury yields rose across the curve as strong services sector data outweighed the impact of increased Treasury buybacks. Market attention now turns to upcoming economic reports and policy announcements, which could further influence yields and investor sentiment.