By Kimberley Kao and Ronnie Harui
Asian equities advanced and government bond yields fell early Thursday, bolstered by the U.S. Treasury's plans to ramp up bond buybacks--a move aimed at easing pressure on a market that had recently driven borrowing costs to their highest levels in nearly two decades.
The Treasury Department said Wednesday that it would double its buyback operations for bonds maturing in 10 years or more, to at least $4 billion per operation from $2 billion currently, effective Sept. 9. The announcement intensified an overnight decline in Treasury yields, which had hit multiyear highs in recent sessions.
"It is a bit of notice of intent that the Treasury is seeing what's going on in longer-end yields and is taking a couple of steps to respond there," said Taylor Nugent, senior economist at National Australia Bank, in a podcast. "What the Treasury has done is kind of bought a bit of reprieve from the [rising yield] trend, and we've certainly seen that in a fallback in longer-end yields," Nugent added.
Yields on Japan's 10-year sovereign debt fell 5.5 basis points to 2.835%, while Australia's 10-year government bonds declined 3 basis points to 4.9950%. New Zealand's 10-year sovereign securities dropped 2 basis points to 4.6900%. Bond yields move inversely to prices.
