Treasury Liquidity Move Triggers Sharp Drop in Long-Term Yields

Yields on long-term U.S. government bonds fell sharply on Wednesday after the Treasury Department announced it would double the size of its liquidity support operations for longer-dated securities, a move aimed at calming a turbulent bond market. The yield on the 30-year Treasury bond dropped nearly 10 basis points to 5.187 percent, retreating from levels near their highest in 19 years.

The action came one day after the 30-year yield touched 5.337 percent on Tuesday, a peak not seen since 2007. The 10-year Treasury yield also saw further declines. The recent surge in borrowing costs has been driven by persistent investor anxiety over inflation and the nation's fiscal trajectory. A global selloff in government bonds, fueled by these concerns, has pushed long-term interest rates to multi-decade highs in the United States, Europe, and Japan.

Analysts said the Treasury's decision to expand its buyback program, effective from September 9 to November 4, signaled official recognition of the market stress. "This measure shows the U.S. Treasury recognizes what is going on in the bond market and is prepared to adjust policy in order to limit pressures on the market," said Jeremy Stretch,...