After two days of turbulent swings, the US Treasury market has settled into a temporary calm, yet investors remain doubtful about the effectiveness of the Finance Department's bond buyback approach in managing long-term borrowing costs, with the US dollar softening in tandem.
On Friday, US stock futures edged modestly higher, with Dow futures gaining 0.16%, S&P 500 futures rising 0.2%, and Nasdaq 100 futures advancing 0.4%. In the bond market, the 30-year Treasury yield held steady at an elevated 5.24%, while the 10-year yield stabilized at 4.70%.
The recent volatility in the bond market has intensified anxiety across financial markets. A series of fiscal policy moves has underscored deepening worries over persistently high long-term yields. Years of elevated inflation combined with sustained government spending have driven up the cost of government financing, and this pressure is gradually transmitting to the broader economy. Meanwhile, lofty long-end rates are undermining the appeal of risk assets, boosting safe-haven demand for gold, with spot bullion surpassing $4,550 per ounce.
Fabien Yip, an international market analyst at IG in Sydney, noted: "The expanded buyback program spearheaded by Bessent's Treasury has failed to convincingly reassure the market that long-term borrowing costs can be durably controlled. At the same time, unresolved tensions in the Middle East and a lack of strong growth momentum in tech stocks are adding further pressure."
Attention is now shifting toward next week's earnings report from Nvidia, along with the upcoming Jackson Hole global central bank symposium.
Key market snapshot
Dow futures up 0.16%, S&P 500 futures up 0.2%, Nasdaq 100 futures up 0.4%.
Euro Stoxx 50 opened up 0.1% at the start of trading, Germany's DAX opened flat, the UK's FTSE 100 opened unchanged, and France's CAC 40 slipped 0.1%.
Japan's Nikkei 225 closed down 0.3% at 66,016.36 points, while the Tokyo Topix index finished 0.2% higher at 4,067.29 points. South Korea's KOSPI composite index closed up 0.9% at 6,912.95 points.
The 30-year Treasury yield remained at a high of 5.24%, with the 10-year yield steady at 4.70%.
Japan's 40-year government bond yield climbed 7 basis points to 4.145%.
The Bloomberg Dollar Spot Index declined 0.2%.
Spot gold gained 1.0% on the day, trading at $4,562 per ounce.
Brent crude slipped 0.5% to around $93.31 per barrel, while WTI crude fell 0.7% to $86.22 per barrel.
Bitcoin advanced 3.7% to $75,356.
Elevated yields persist as strategy uncertainty fuels term premium concerns
The 30-year Treasury yield continues to hover near its 5.24% peak, while the 10-year yield holds steady at 4.70%.
In response to Thursday's market turbulence, Bessent sought to downplay the swings, remarking that "anything that happens within a 24-hour window is just noise." He also indicated that the expanded buyback program's scale "could exceed" the $4 billion initially slated to launch next month.
However, market participants warn that the lack of predictability in the Treasury's debt management strategy could ultimately push government borrowing costs higher. Investors and analysts at JPMorgan, Jefferies, and PGIM point out that this uncertainty may inflate the term premium on Treasuries — the extra compensation investors demand for bearing potential risks.
Hardika Singh of Fundstrat Global Advisors commented: "In my view, the 'Bessent put' still struggles to keep yields that are at multi-decade highs in check over the long run. To achieve a sustained decline in yields, genuine efforts to reduce debt levels are essential, and that will certainly not be easy."
Dollar weakness and risk-off sentiment lift gold for a third weekly gain, while oil faces pressure
Supported by a weaker US dollar following the Treasury's buyback announcement, along with heightened risk-off sentiment, prices for precious and industrial metals have strengthened across the board.
In gold, spot bullion rose 1% on the day to $4,562 per ounce, with weekly gains on track to mark a third consecutive advance.
On the geopolitical front, US Treasury Secretary Bessent said on the 20th that the Trump administration will intensify economic pressure on Iran, threatening "unprecedented economic isolation" measures against the country.
In the oil market, Brent crude fell 0.3% to approximately $93.45 per barrel, snapping a five-session winning streak. Mohit Kumar, a strategist at Jefferies, noted that oil prices are likely to remain elevated, which could exert upward pressure on long-term Treasury yields.
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