Global financial markets remained under pressure on Thursday as U.S. Treasury yields climbed again, raising doubts about how effective the Treasury Department’s recently announced long-term debt buyback program will be.

U.S. Treasury Yields Rebound

The 30-year U.S. Treasury yield rose to 5.2235%, after earlier falling to 5.1765%.

Meanwhile, the benchmark 10-year Treasury yield increased by around 1.9 basis points to 4.6723%, following a 5-basis-point decline in the previous session.

The move suggests that the positive impact of the Treasury’s announcement to expand long-term bond buybacks is fading relatively quickly.

According to some analysts, the program may help improve market liquidity and limit excessive swings in yields, but it is unlikely to resolve the deeper forces currently putting pressure on the bond market.

Stocks Remain Under Pressure

Higher bond yields typically reduce the relative appeal of equities, particularly as they increase borrowing costs for businesses.

The MSCI global stock index fell for four consecutive sessions, its longest losing streak since March, before recovering around 0.30% on Thursday.

In Europe, the STOXX 600 slipped about 0.20%, while S&P 500 futures fell 0.14%.

Technology stocks, however, continued to receive some support from optimism surrounding artificial intelligence, as major companies remain committed to heavy AI-related investment.

Higher Oil Prices Add to Inflation Concerns

Market sentiment was also weighed down by rising oil prices.

Brent crude climbed 1.54% to $93.06 per barrel, as disruptions in the Strait of Hormuz showed few signs of easing.

Persistently high energy prices could make inflation more difficult to contain, potentially adding further pressure on the Federal Reserve and keeping bond yields elevated.

U.S. Dollar Weakens as Fed Remains Concerned About Inflation

In currency markets, the U.S. Dollar Index fell 0.11% to 98.72.

Meanwhile:

• EUR/USD rose to around 1.1694, its highest level since May.

• USD/JPY traded near 158.44.

Minutes from the Federal Reserve’s latest policy meeting also showed growing concern about inflation. Several policymakers appeared willing to support another rate hike, while many indicated that further tightening could be necessary if inflation fails to move back toward the Fed’s 2% target.

Conclusion

Markets are currently facing a difficult balancing act.

The U.S. Treasury is attempting to ease pressure at the long end of the yield curve, but investors remain concerned about inflation, elevated oil prices, and the Federal Reserve’s policy outlook.

In the near term, investors will continue to closely monitor U.S. Treasury yields, oil prices, inflation data, and signals from the Fed to assess whether the current market stress will continue to spread across risk assets.

This article is for informational and market analysis purposes only and does not constitute investment advice.

Source: Reuters