Specialist Gregg Maloney works on the floor of the New York Stock Exchange, Monday, Aug 17, 2026, in New York. (Photo: AP/Yuki Iwamura)
20 Aug 2026 05:22AM
NEW YORK: Stock markets mostly rose on Wednesday (Aug 19) and the dollar fell sharply after the US Treasury signalled action to push down government bond yields, easing fears that higher borrowing costs would weigh on economic growth worldwide.Oil prices again moved higher on doubts of any quick deal to reopen the Strait of Hormuz to tanker traffic, stoking the inflation fears that have rattled markets since the US-Iran war began nearly six months ago.Those fears and worries about ballooning government deficits have sent bond prices falling - increasing the rates that investors demand to keep financing state borrowing. Higher interest rates are a particular threat to tech companies, which are borrowing massively to fund AI investments that have spurred momentum for stocks across the board.But the US Treasury surprised markets Wednesday by saying it would increase "by at least double" its sovereign bond buybacks to push down 30-year yields that have soared in recent days.After three straight losing sessions, Wall Street indices advanced, though the gains were modest. The S&P 500 ended up 0.2 per cent. The announcement on sovereign bond buybacks represents "a very strong sign that the Treasury has decided higher US yields are unacceptable," said Neil Wilson, a strategist at Saxo Markets, noting the shift in bond yields provided relief for equities "which had come under pressure from the rumble towards multi-year/decade highs for sovereign yields."Minutes from the Federal Reserve's last meeting showed that many policymakers believe that interest rate hikes will be necessary if inflation does not decline. The minutes chronicled conversations from a late July meeting at which three of the 12 voting members of the Federal Open Market Committee (FOMC) dissented from the majority decision to hold rates steady.Policymakers noted that economic activity had continued to expand at a "solid pace," but noted that business investment was concentrated in AI industry expenditures.
