# Tinkering with treasuries calms bond and equity markets

By Bryn Jones — 2026-08-20

Bryn Jones, head of fixed income at Rathbones Asset Management, said: “Bond markets have calmed and the yield curve has flattened, largely driven by action from the US Treasury. Yesterday, it stepped in by doubling the size of its liquidity-support buybacks for longer-dated coupon securities, targeting the 10–20 year and 20–30 year sectors. The objective is not quantitative easing or additional monetary stimulus, but rather to improve market liquidity and functioning in areas of the Treasury market that have recently faced significant selling pressure and weaker investor demand. The move also signals that policymakers are increasingly uncomfortable with the pace of the recent rise in long-end yields.

“The current maximum buyback size of $2bn per operation will increase to $4bn from September 9 and remain in place until the end of the refunding quarter on November 4, with a further announcement expected thereafter. While the increase is not especially large, it reflects the Treasury’s desire to provide greater liquidity support to longer-dated nominal sectors, where market participation remains strong, as evidenced by the substantial volume of high-quality offers received in previous buyback operations.

“Overall, long-end 30-year maturity bonds rallied by 9bp from their recent highs, levels last seen in 2007. Renewed discussion around financial repression also helped drive gold prices to their biggest gain since the start of the Middle East conflict. Interestingly, investor demand had already begun returning to long-duration fixed income before the Treasury announcement, with long-bond ETFs attracting unusually strong inflows. This suggests some investors were already viewing yields above five per cent as an attractive entry point, or questionable coincidence.

“In the Middle East, traffic through the Strait of Hormuz is averaging around six vessels per day, down from 24 during the initial recovery period following the MoU. It remains difficult to gauge exactly how much oil is getting through, but refining margins are still extremely elevated, suggesting pump prices are unlikely to fall any time soon. As a result, headline inflation is likely to remain elevated over the coming months.”

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