How long can this Bessent put last?
SPY•Other market developments in focus
Elsewhere in markets, Australian employment unexpectedly fell in July and the jobless rate hit its highest point since late 2021, data showed on Thursday, adding to signs of a cooling labour market and easing pressure for another interest rate hike.
Markets are pricing in little chance of a rate hike from the Reserve Bank of Australia next month, but a move by the end of the year is still viewed as a coin toss, with much riding on inflation outcomes.
Meanwhile, Sweden's Riksbank is seen keeping its policy rate unchanged at 1.75% later in the day, given mild headline inflation thanks to a largely fossil-fuel-free energy system.
Key developments that could influence markets on Thursday:
- Germany producer prices (July)
- Reopening of 3-year, 5-year, 6-year, 8-year, 17-year and 21-year government debt auctions in France
- Riksbank rate decision
Treasury buybacks calm bond markets, but relief may be temporary
Some calm was restored to markets on Thursday after the U.S. Treasury slammed the brakes on an ugly bond selloff this week, but the respite may prove short-lived.
U.S. Treasury yields were steady in Asia while Japanese government bond yields fell, after the U.S. Treasury announced it will double buyback sizes for 10- to 30-year Treasury debt securities to at least $4 billion per operation.
That marked the second time this month that U.S. Treasury Secretary Scott Bessent has stepped in to try to counteract market moves, having joined Japan in an August 1 currency market intervention to stem the yen's JPY= slide.
While Wednesday's announcement was a clear indication of Bessent's discomfort with current yield levels, the selloff in Treasuries was not without reason.
