Emerging-market stocks rebounded on Thursday from the previous session's losses, as investor nerves eased on the U.S. Treasury's move to temper a sharp bond rout, while regional currencies strengthened on a weaker U.S. dollar.
The U.S. Treasury said it would double the size of buybacks for long-dated debt, aiming to curb the rise in borrowing costs that had pushed the 30-year Treasury yield US30YT=RR to its highest level since 2007 earlier this week.
Global yields eased following the announcement. Bond markets from the U.S. to Germany and Japan had come under pressure this week due to growing concerns over rising government debt, compounded by heavy AI-related borrowing by technology companies and elevated oil prices because of Middle East supply disruptions.
"The U.S. Treasury's intervention may help stabilize bond markets in the near term, but it does not alter the fundamental drivers behind higher long-term yields," UBS analysts said in a note.
"The additional buybacks are relatively small compared with the size of the Treasury market and should be viewed primarily as a policy signal rather than a structural solution."
Oil prices rose on the day. Despite the added burden of higher fuel costs for energy-dependent developing economies, MSCI's emerging-markets stock index .MSCIEF gained 1.9% after two straight sessions of losses. Its currency counterpart .MIEM00000CUS edged 0.2% higher.
The currency index has hovered near all-time highs for much of the month, helped by a softer U.S. dollar that fell to a three-month low on Thursday, easing pressure on emerging-market currencies.
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