Arabic version: خطة إعادة شراء سندات الخزانة تثير مخاوف التضخم

According to Cnbc, investors have increasingly priced in higher inflation following the Treasury Department’s announcement that it will at least double the size of its typical government-debt buybacks. The move was intended to improve liquidity in the market for longer-dated debt, but market-based inflation expectations rose to their highest levels in more than two months.

The 10-year breakeven rate, which compares Treasury yields with inflation-protected securities of the same maturity, rose to 2.34% on Thursday, its highest level since June 10. Five-year breakevens also reached 2.34%, the highest since June 16. The measures do not signal expectations for runaway inflation, but indicate growing concern over inflation risk and other factors investors weigh when holding debt.

Treasury said Wednesday that it would at least double its typical $2 billion debt buyback. Treasury Secretary Scott Bessent said the action was not an attempt to reduce yields. Long-dated Treasury yields initially fell after the announcement, then rebounded. The 10-year yield stood at 4.73% in early afternoon trading, up 3.4 basis points on the day and above its pre-announcement level, while the 30-year yield rose 3.6 basis points to 5.27%.

Van Hesser, chief strategist at KBRA, said the market faces a “cocktail of concerns,” with inflation risks continuing to weigh on investors. Thierry Wizman, Macquarie Group’s global foreign exchange and rates strategist, said the 10-year breakeven rose about 6-7 basis points after the announcement, suggesting investors viewed something about the move as inflationary. The response also raises attention on Fed Chairman Kevin Warsh’s scheduled Aug. 28 keynote at the central bank’s annual Jackson Hole symposium.