Market Update: Treasury Acts to Curb Yields Amid Debt Swell

The U.S. Treasury Department’s decision to double its purchases of longer-dated bonds aimed to suppress yields and uplift equities, though the escalating national debt, now past $40 trillion, remains a significant long-term concern.

• The U.S. Treasury Department announced a significant increase in its buyback operations for 10- to 30-year securities, aiming to at least double purchases from $2 billion to $4 billion per operation over the next two months to depress yields.
• Following the Treasury’s announcement, bond prices surged, driving the 30-year Treasury yield down by approximately 9 basis points and the benchmark 10-year yield lower. This move helped break a three-day losing streak for stocks, with all three major U.S. indexes posting modest gains of about 0.2%.
• The U.S. gross national debt has surpassed an unprecedented $40 trillion, with the government deficit swelling to $1.8 trillion this year, highlighting the escalating fiscal challenges and rising interest expenditures.
• Cryptocurrencies experienced a notable surge, with Bitcoin climbing over 7% and Ether rising more than 18%, as the decline in Treasury yields typically boosts risk assets.
• Moderna and Merck shares soared following encouraging initial results from a late-stage trial of their experimental personalized cancer vaccine, showing significant extension of recurrence-free time for melanoma patients when combined with Keytruda.
• Nvidia is expanding its influence in the AI ecosystem by reportedly acting as a matchmaker in the Nordics, connecting companies with its GPUs to data center operators to accelerate AI infrastructure deployment.
• Former President Trump criticized the Federal Reserve’s ‘artificially high’ interest rates and threatened economic warfare against Iran, proposing severe financial penalties on nations aiding Tehran in evading sanctions.