Bond yields plunge after Treasury’s surprise move to ease rates

Longer-term U.S.

Longer-term U.S. Treasury yields dropped sharply Wednesday after the Treasury Department announced that it would increase the size of its government debt repurchases by “at least double” in a surprise move.

The yield on the 30-year Treasury bond plunged from 5.26% to as low as 5.18%. The 10-year yield, which has a heavy hand in steering consumer borrowing rates, was less impacted by the announcement but still dropped from 4.68% to 4.64%.

U.S. stocks also opened slightly higher. The S&P 500 rose 0.4% and the Nasdaq Composite rose 0.3%.

In effect, the Treasury Department’s announcement means the agency will be stepping in as a larger buyer of longer-term bonds, which have been selling off.

Wednesday’s announcement abruptly altered the “tentative buyback schedule” Treasury had released just two weeks ago, an unusual shift. The change will take effect on Sept. 9, the agency said.