Market Quick Take - US Treasury Buyback Announcement Punishes USD - 20 August 2026

Market drivers and catalysts

• Macro: US Treasury yield curve in focus after US Treasury announces buyback announcement aimed at taming long-term yields.
• Equities: US equities recovered as Treasury buybacks eased bond pressure, Europe stayed mixed, Asia rebounded sharply, led by Korean semiconductors.
• Digital Assets: Bitcoin surges as short squeeze and White House crypto optimism collide
• Commodities: Gold surges as yields and dollar tumble, while oil holds firm on Iran tensions
• Fixed Income: US Treasury yield curve flattens after US Treasury buyback announcement. Japan’s long yields dropped even more sharply.
• Currencies: The US dollar weakened sharply on the US Treasury buyback announcement, particularly against the Swiss franc.

Macro

• The U.S. Treasury will at least double buybacks of 10- to 30-year debt after 30-year yields reached their highest since 2007, highlighting Treasury Secretary Scott Bessent’s increasingly interventionist approach to containing borrowing costs. The move, which pushed the 30-year yield around 9 bps lower to 5.19% ahead of a USD 16 billion 20-year auction, marks a notable departure from the traditional “regular and predictable” approach and may be viewed as an attempt to influence the yield curve and support market stability. The move hurt the USD, lifting gold and other hard assets.
• July FOMC minutes showed most officials favored holding rates, though several wanted a hike and said more increases may be needed if inflation stays high. They noted tighter financial conditions, broad-based price gains, and an outlook of similar inflation but slightly weaker growth. Chair Warsh floated cutting to six meetings a year, with no change for 2026.
• Trump said oil is still flowing through the Strait of Hormuz and signalled openness to talks with Tehran “at some point,” while simultaneously stepping up economic pressure on Iran seeking to isolate Iran economically after its military campaign failed to force a surrender. He threatened an “ECONOMIC D-DAY”, warning countries providing Iran with an economic lifeline of severe consequences, putting particular focus on China as the largest buyer of Iranian oil.
• Australia’s August employment data showed a small 16.3k gain in full time employment, though July full time employment was revised up nearly 30k to 48.9k, while August part-time employment fell -32.2k (and July revised -16k lower). The overall Unemployment Rate rose 0.1% to 4.5% versus expectations for an unchanged 4.4% reading, despite a 0.1% drop in the participation rate.
• More in our Macro Analysis & Macroeconomic News

Macro calendar highlights (times in GMT)

• 0730 – Sweden Riksbank Rate Decision
• 1230 – US Weekly Initial Jobless Claims
• 1230 – US Aug. Philadelphia Fed Business Outlook survey
• 2300 – Australia RBA’s Governor Bullock to speak
• 2330 – Japan Jul. National CPI
• 0030 – Japan Aug. Preliminary Manufacturing and Services PMI
• Fed speakers: Daly (1230) & Musalem (15:10)

Earnings events

• Thursday: Walmart, Deere & Company, Ross Stores, Netease, Fortescue, Novonesis

For all macro, earnings, and dividend events check Saxo’s calendar.

Equities

• USA: The S&P 500 rose 0.2% and the Dow gained 0.2%, while the Nasdaq 100 fell 0.2%, as expanded Treasury buybacks eased pressure on long-term yields and ended a three-session losing streak. Moderna rocketed 177% after its personalised cancer vaccine with Merck succeeded in a Phase 3 melanoma trial, lifting Merck 12.6%. Marvell gained almost 10% after securing a major custom artificial intelligence chip agreement with Google, while Target rose 4.3% after beating earnings expectations and raising its sales outlook. Attention now turned to Walmart earnings and whether lower yields could stabilise technology shares.
• Europe: European equities remained mixed as high bond yields and inflation concerns continued to weigh on technology and financial shares. The Stoxx 600 slipped 0.1% for a sixth straight decline, while the DAX fell 0.1%, the FTSE 100 gained 0.1% and the CAC 40 edged higher. ASML fell 2.2% as semiconductor weakness persisted, while Rockwool dropped 5.0% after results failed to reassure investors despite an improved revenue outlook. AstraZeneca gained 2.1% as healthcare outperformed. Bond yields remained the main cross-market risk.
• Asia: Asian equities rebounded sharply in Thursday’s session as easing US bond-market pressure encouraged investors back into technology shares. South Korea’s Kospi surged around 6%, Japan’s Nikkei gained 1.3%, Hong Kong’s Hang Seng rose 1.1% and Australia’s ASX 200 added 0.3%. SK Hynix jumped 14.1% after announcing a KRW 40 trillion share buyback and cancellation programme, while Samsung Electronics rallied 9.7% amid expectations for stronger shareholder returns and a broader memory-chip rebound. The move reversed much of Wednesday’s semiconductor-led selloff, although recent volatility remained unusually high. Investors now watched whether lower global yields could sustain the recovery.
• More in our Equity Trading - Stock Market Analysis & News

Digital Assets

• Bitcoin surged nearly 8% on Wednesday, according to Bloomberg triggering the biggest wave of short liquidations since records began in 2021, with more than USD 1 billion of shorts wiped out in about an hour. The rally coincided with President Trump meeting crypto executives at the White House, reinforcing optimism over a more industry-friendly regulatory environment. The move broadened across digital assets, with Ether jumping 16%, while Bitcoin broke above its 100- and 200-day moving averages and US spot Bitcoin ETFs attracted USD 517 million of net inflows.

Commodities

• Gold surged more than 4% to challenge the 200-day moving average at USD 4,511, its largest single-day gain in six months and its highest level since early June. The move was driven by the sharp fall in the dollar and long-end Treasury yields following the buyback announcement, with analysts noting the rally also reflects a growing market premium on US institutional and policy volatility.
• Brent crude held above $91 per barrel into Thursday’s session, extending a four-day run of gains as President Trump announced sweeping new economic measures against Iran and the UAE cut trade and financial ties with Tehran. Meanwhile, there are signs that some crude from other Persian Gulf producers is being covertly ferried out through Hormuz despite threats to shipping. In the US, refineries are processing the most crude since 2019 while nationwide distillate stocks continue to tumble, hitting a 1996 seasonal low in EIA’s latest report.
• Copper received a boost from the weaker dollar while the historic LME squeeze continued to ease, with the cash-to-three-month backwardation falling to around $248 per metric ton from a peak of $545 earlier in the week, after Trafigura and other traders made significant metal deliveries to the exchange, thereby easing a squeeze on supplies after being drained by a surge in shipments to the US ahead of a potential tariff announcement. HG Copper traded near USD 6.50 after finding support around the 50-day moving average at USD 6.39.
• More in our Commodity News, Analysis & Commentary

Fixed Income

• The US Treasury’s announcement Wednesday of increased buybacks of long-dated treasuries flattened the US treasury yield curve sharply. The USD 4 billion size of the buybacks is vanishingly small relative to the size of the US treasury market but is a loud symbolic signal that the Treasury does not want higher yields. Shaping the yield curve and buying treasuries is normally a policy area for the Fed, so it sets up an interesting tension with Fed Chair Kevin Warsh, who will speak at next Week’s Fed symposium at Jackson Hole, Wyoming. In any case, the benchmark 30-year treasury yield, fell some nine basis points after the announcement to trade below 4.20% and near two-week lows. The benchmark 10-year yield was only a few basis points lower in the wake of the announcement at 4.64%, within the trading range of the last week.
• Japan’s government yield fell sharply at the long end of the yield curve, likely in part due to the fall in long US treasury yields on the buyback announcement that suggests the US treasury will not tolerate higher yields. The benchmark 30-year JGB yield fell 13 basis points Thursday, more than its US counterpart did in Wednesday’s session, trading just below 4.0%. The 10-year JGB yield fell some eight basis points to 2.84%, taking it further away from the multi-decade high of 2.96% of just two days prior.

Currencies

• The US dollar fell sharply in the wake of the US Treasury’s announcement of a doubling of its long-term treasury buyback operations as the move suggest the treasury won’t tolerate higher yields, setting up interesting questions about the independence of the Fed as well. USDJPY was already offered ahead of the announcement and trading near 159.00 after the recent highs just below 160.00 and fell further to nearly 158.00 before bouncing sharply in early Thursday trading hours to above 158.70. Japan reports its July National CPI data on Friday. EURUSD rose as high as 1.1684 after trading near 1.1600 at the time of the US Treasury announcement. This was its highest level since late May.
• The Swiss franc was particularly reactive to the US Treasury announcement of increased buybacks as it goes against the recent popularity of CHF-funded carry trades based on Switzerland’s low yields. EURCHF fell sharply Wednesday from near 1-year highs around 0.9400 to as low as 0.9310 before rebounding and the bottom fell out of USDCHF, which plunged from near 0.8100 to as low as 0.7970 late Wednesday before rebounding toward 0.8000 by early Thursday in Europe.
• More on currencies in our dedicated section: Forex Trading News & Analysis