Stocks● Neutral
Treasury to Double Long-End Buybacks, MBS Rally Fades
Treasury plans to double long-end buybacks this fall, supporting longer-dated bonds. FOMC minutes show rate hike risk if inflation persists. MBS prices slipped Thursday.
Continue with
The Treasury said it will at least double the maximum size of its long-end bond buybacks starting this fall, a move that rallied longer-dated Treasuries and agency MBS on Wednesday. The rally was tempered by a $16 billion 20-year auction that met tepid demand.
Some analysts characterized the buyback plan as a form of Operation Twist, where the central bank sells short-term bonds and buys longer-term ones to lower long-term rates without expanding its balance sheet. The announcement offered relief from persistent pressure on the long end, which had been driven by inflation expectations and fiscal deficits, pressures compounded by heavy tech-sector borrowing, traders said.
The 20-year auction tailed slightly, according to Treasury data, signaling lingering demand concerns.