Global markets saw positive price movements Wednesday as selling pressure in bond markets eased after the US Treasury announced it would increase the size of its long-term bond buyback operations.
Bond markets had come under sustained pressure earlier in the week amid mounting concerns over sovereign debt.
Tech companies' heavy borrowing to finance their massive artificial intelligence (AI) investments further exacerbated the pressure, alongside persistently high oil prices due to ongoing Middle East tensions.
Risk appetite in global markets improved after the US Treasury's decision to at least double the size of long-term securities buyback operations, fueling hopes that borrowing costs will decline.
The Treasury Department said the maximum size of buyback operations for nominal coupon securities in the 10- to 20-year and 20- to 30-year maturity sectors would increase from the current $2 billion per operation to at least $4 billion.
Further details on the size of future buybacks will be released in the Treasury's next quarterly borrowing announcement on Nov. 4, the department added.
The decision does not constitute monetary easing or yield curve control, though analysts said it signals that US economic policymakers are prepared to counter rising term premiums.
The yield on the 10-year US Treasury note fell eight basis points Wednesday to 4.64%, while the 30-year yield dropped 10 basis points to 5.19% after reaching its highest level in 19 years. Both were trading roughly flat Thursday.
Meanwhile, minutes from the Federal Reserve's July meeting showed that some officials believed monetary policy might need to be tightened if inflation failed to subside.
Policymakers voted 9-3 to keep the federal funds rate unchanged at a range of 3.5%-3.75%. It was the first time since 2016 that three members of the Federal Open Market Committee dissented in the same direction on a policy decision.
US public debt, meanwhile, surpassed $40 trillion for the first time, up from $38.4 trillion at the beginning of 2026 and more than $30 trillion at the start of 2022.
The increase has come amid higher government borrowing, rising interest costs and the lingering fiscal impact of measures introduced during the COVID-19 pandemic.
As for geopolitical developments, US President Donald Trump said the Strait of Hormuz is entirely under American control and that talks with Iran could resume at some point.
Trump also said the Strait of Hormuz may not be as important as it once was as alternative routes and newly laid pipelines become more prominent. He also announced an economic operation against Iran and threatened countries supporting Tehran with economic consequences.
However, high oil prices continued to concern investors as hopes for a near-term resolution to the US-Iran conflict waned, with October-delivery Brent crude rising 0.1% to $91.70 a barrel.
The US Dollar Index was trading flat at 98.8 after recently falling to three-month lows.
Gold closed Wednesday at $4,523 per ounce, up 4.4%, as falling bond yields, a weaker dollar and Federal Reserve policy expectations supported demand for the precious metal.
Gold closed Wednesday at $4,523 per ounce, up 4.4%, driven by the US Treasury’s decision to increase its long-term buyback operations scale. The dollar’s depreciation and renewed expectations over financial conditions supported gold’s rise.
Strong corporate earnings and falling bond yields also helped US stocks close higher Wednesday.
US biotech firm Moderna's shares surged 176% after it reported positive results from late-stage trials of a melanoma vaccine developed in partnership with Merck.
The Dow Jones Industrial Average gained 0.22%, the S&P 500 climbed 0.21% and the Nasdaq rose 0.16% on Wednesday. American indexes kicked off Thursday on a positive note.
The picture in Europe
Risk appetite in Europe remained subdued due to high oil prices.
European Central Bank (ECB) President Christine Lagarde said mounting global trade restrictions, high energy costs and geopolitical risks had changed Europe's traditional growth model, urging the continent to address fragmentation in the single market and capital markets to maintain its competitive edge.
The eurozone's consumer price index (CPI) rose 0.2% month-on-month and 2.9% year-on-year in July, in line with estimates. The annual inflation rate was unchanged but remained above the ECB's 2% target.
UK consumer inflation rose 0.3% month-on-month and 2.9% year-on-year in July, its highest annual rate in four months. The CPI had risen 0.1% month-on-month and 2.6% year-on-year in June.
Rising energy costs due to the Middle East conflict contributed to accelerating inflation, while the ongoing drought in the UK could put further upward pressure on food prices in the coming months.
Such inflationary pressures could prompt the ECB and the Bank of England (BoE) to hike rates.
Germany's DAX 40 climbed 0.14%, Italy's FTSE MIB 30 increased 0.75% and the UK's FTSE 100 rose 0.14%, while France's CAC 40 fell 0.09% Wednesday. European indexes opened lower Thursday.
Asian markets up Thursday
Asian equity markets also traded higher Thursday.
South Korean chipmaker SK Hynix's shares surged 15.1% after it announced a share buyback of around $29 billion aimed at reassuring investors concerned about AI spending.
The People's Bank of China (PBoC) maintained its benchmark one-year lending rate at 3% and five-year rate at 3.5% in August as policymakers refrained from further monetary easing despite signs of weakening domestic demand. The bank has kept rates unchanged since May 2025.
Japan posted a trade deficit of $4 billion in July, below estimates, while exports rose 23.2% year-on-year and imports climbed 27.8%, both above expectations.
Selling pressure in Asian bond markets also eased as Japan's 10-year government bond yield fell six basis points to 2.83%.
Near Thursday's close, Japan's Nikkei 225 gained 1.2%, South Korea's Kospi surged 6%, China's Shanghai Composite rose 0.6% and Hong Kong's Hang Seng was up 1.1%.
