The U.S. Treasury Department takes urgent measures to stabilize the bond market! The scale of long-term U.S. Treasury bond buybacks at least doubles, and U.S. Treasury yields fall across the board.

At a time when long-term U.S. Treasury yields have unexpectedly risen to their highest levels in years, the U.S. Treasury Department has announced it will increase its buyback efforts for long-term Treasuries. Just two weeks after unveiling its bond buyback plan for the current quarter, the Treasury stated on Wednesday that it will "at least double the size of its liquidity support buyback operations" for bonds with maturities ranging from 10 to 30 years. Treasury Secretary Janet Yellen had activated the bond buyback program last year, viewing it as part of a "comprehensive set of tools" the Treasury could deploy when necessary to address disorder in the Treasury market. Following the announcement, yields on Treasuries of all maturities fell across the board. As of the time of writing, the 30-year yield decreased by 9 basis points to 5.19%, while the "anchor of global asset pricing"the 10-year Treasury yielddropped by over 6 basis points to 4.644%. The Treasury stated in its announcement: "This increase in the size of buyback operations reflects the Treasurys desire to provide greater liquidity support in the long-term nominal bond space. Market participants have continued to show strong subscription interest in these areas, and the Treasury often receives a significant number of high-quality bids in long-term bond buyback operations, which confirms this point." John Briggs, head of U.S. interest rate strategy at Natixis North America, commented, "The key here is the timing. In my view, this is no coincidence, which makes the signals it sends even more important. If yields rise too high, the Treasury will attempt to curb themand now we know where some of the critical points of pressure may lie." This significant announcement from the Treasury comes amid heightened market concerns triggered by a recent global selloff in long-term government bonds. On Tuesday morning, the 30-year Treasury yield reached its highest level since 2007 at 5.32%, up about 46 basis points from the end of June; the 10-year Treasury yield hit 4.74%, rising a total of 35 basis points since the summer and nearing its highest level in 18 months. Governments outside the U.S. are also facing pressure on their bonds, with many countries witnessing yields at or near multi-decade highs. The German benchmark 10-year bond yield hit a 15-year high; the French 10-year bond yield reached its highest level since 2008; and the Japanese 10-year bond yield rose to 2.941%, surpassing the 30-year high set earlier this spring. Yields on government bonds of the UK, Italy, Switzerland, and Canada have also surged significantly. While the bond markets of various countries are influenced by their domestic factors, the structural forces driving yields higher have global commonalities. On one hand, market concerns that an increasingly fragmented world order will make economies more vulnerable to supply shocks have sustained inflationary pressures; on the other hand, bondholders worry that governments will struggle to control fiscal spending, forcing interest rates to remain elevated for a longer period. Amidst this "storm," U.S. Treasuries stand out as a focal point. In the context of recent cooling expectations for Federal Reserve rate hikes, the key reason long-term Treasuries continue to be sold off is the risk premium. Holding long-term Treasuries means facing fiscal supply, recurring inflation, and policy uncertainty, thus investors are demanding significantly higher compensation. Additionally, uncertainties surrounding Fed policy communication are viewed as a new factor contributing to the rising risk premium for long-term Treasuries, while the shift of major tech giants to the bond market for financing has also diverted some demand away from U.S. Treasuries. Dan Coatesworth, market head at AJ Bell, stated on Tuesday that repeated failures in peace efforts have left investors most concerned about inflation risks and potential rate hikes. However, he added, "The rise in long-term bond yields is not solely driven by rate hike and inflation expectations. It also reflects market concerns about excessive government borrowing, leading investors to demand higher compensation to hold long-term government bonds." Jim Reid, an analyst at Deutsche Bank, pointed out that the recent downturn in the bond market has not been driven by a single event. "However, with no signs of an agreement between the U.S. and Iran, investors are beginning to price in an extended blockade of the Strait of Hormuz. The market expects oil prices will remain high for a longer period. Concerns over a long-term blockade in the Strait of Hormuz are intensifying, adding pressure to the fixed income market, particularly impacting long-term sovereign bonds." Meanwhile, traders are preparing for a new $16 billion 20-year Treasury auction. On Wednesday local time, the U.S. Treasury will issue $20 billion in 20-year Treasuries, with approximately $16 billion being new issuance targeted at investors. Given the recent continuous rise in long-term U.S. Treasury yields, this auction serves as an important window for the market to assess investors views on the U.S. fiscal situation and the debt supply's ability to withstand pressure. The central question is how much higher interest rates will need to go in the future to continue attracting global capital to purchase U.S. Treasuries as the government's borrowing needs expand. Over the past week, the U.S. Treasury market has already sent similar signalsyields on the 10-year Treasuries auction reached 4.683%, the highest level in 19 years; while the yield on the 30-year Treasuries auction hit 5.216%, the highest level in 25 years.