Dollar weakens after Treasury boosts long-dated bond repurchases
UUP•Treasury move pushes long-dated yields lower
The announcement suggests an expansionary monetary policy and the availability of more dollars in the market, which is causing the U.S. currency to depreciate, said Juan Perez, director of trading at Monex USA.
"It makes sense for the dollar to depreciate since this is on top of other themes that have been negative for the dollar including a Federal Reserve that is not going to be communicative and no progress on the Middle East tensions," Perez said.
Long-term Treasury bond yields fell following the announcement, with the 30-year bond US30YT=RR yield dropping almost 10 basis points to 5.1942%. The yield on benchmark U.S. 10-year notes US10YT=RR fell 5.74 basis points to 4.649%.
The U.S. Treasury said the change will be effective between September 9 and November 4.
"Treasury would have to issue more treasury bills to finance the removal of duration from the market," said Deutsche Bank analyst George Saravelos in an investor note.
