US Treasury doubles bond buybacks as yields ease, stocks rise

Wall Street's main indexes closed modestly higher on Wednesday as a retreat in government bond yields boosted risk appetite, led by a record rally in Moderna shares after a cancer therapy trial success. The S&P 500 gained 0.24%, the Dow rose 0.23%, and the Nasdaq added 0.15%, according to preliminary data.

The move followed the US Treasury Department's announcement that it would at least double the maximum size of its debt buyback operations, from $2 billion to $4 billion, targeting longer-dated bonds with maturities of 10 to 20 years and 20 to 30 years. The Treasury cited a need for greater liquidity support after the 30-year yield hit its highest level since 2007. Livemint reports the dollar fell to its lowest level since late May on the announcement.

The Federal Reserve's July meeting minutes showed deepening concern about inflation, with 'several' policymakers ready to raise rates and 'many' saying a hike would be needed if inflation does not fall to the 2% target. Economists quoted by Hindustan Times warned that Treasury's intervention could make the Fed's inflation fight harder. Markets now price a 31% probability of a rate hike in September.