Wall Street Rebounds as US Treasury Expands Long-Term Bond Buybacks

The three major U.S. stock indices closed slightly higher.

Notably, the S&P 500 recovered the 7,700 level in just a single day.

By sector, materials and healthcare rose by 3%, while consumer discretionary gained over 2%.

Wall Street successfully rebounded as the U.S. bond market stabilized following emergency measures by the Treasury to expand long-term bond buybacks, or repurchases.

Recently, the government issued massive amounts of treasury bonds to cover a staggering fiscal deficit nearing 40 trillion dollars, which, compounded by large corporations issuing corporate bonds to fund artificial intelligence infrastructure investments, overwhelmed the market's absorption capacity.

As bond values dropped, yields on 30-year Treasuries surged past 5.3% during the session, hitting their highest level in 19 years.

With the situation turning critical, the U.S. Treasury abruptly announced that it would expand the buyback scale for long-term government bonds with maturities of 10 to 30 years by at least twofold or more.

In response, the 30-year yield fell by about 9 basis points in a single day down to 5.19%, prompting a relief rally in the stock market.

However, this government intervention does not completely resolve the high-interest-rate problem.

In the minutes of the July FOMC meeting, Federal Reserve officials displayed hawkish vigilance, stating that additional rate hikes could be pursued if inflation is not brought under control.

By stock, amid the fallout from OpenAI's sluggish performance, AI semiconductor shares such as Broadcom and AMD fell by 3%, whereas Marvell Technology surged 9% following a custom AI chip development contract with Google, showcasing divergent performances among individual stocks.

While the U.S. Treasury's emergency liquidity injection has provided temporary breathing room, structural fiscal deficits and inflation concerns continue to stimulate market caution.
※ Please note: This article was translated by AI and may contain errors.