US 10-Year Treasury Yield Tops 4.85% Despite Buyback Expansion
The 10-year US Treasury yield rose above 4.85%, marking its highest level since November 2023, despite the US Treasury tripling its long-term bond buyback program to $6 billion.
The 10-year US Treasury yield closed above 4.85% on Wednesday. This is the highest level recorded since November 2023. The yield increased by 15 basis points following the Treasury’s announcement. The US Treasury stated it would triple its long-term bond buybacks to $6 billion. Market data from GN auto markets/bonds: bond trading indicates that yields continued to climb despite this intervention. The bond market is currently pushing back against the administration’s debt management strategy. Since the conflict in Iran began, the 10-year yield has risen by nearly 100 basis points.
Interest payments on government debt across the OECD now exceed $2 trillion per year. Financial Times data suggests these costs will continue to rise. Japan’s foreign exchange reserves fell by $94.6 billion in August. This represents a decline of 8.7% to a total of $995 billion. It is the largest monthly drop in Japan’s record history. The Ministry of Finance intervened to support the yen. From May to August, reserves declined by a cumulative $174 billion. US Treasury holdings in Japanese reserves dropped by $87.8 billion in August alone.
Equity Market Correlations Remain Unusually Low
The S&P 500 shows signs of fragility beneath its surface calm. Six-month realized correlation has dropped to 0.11. This level has been reached only twice in the past 25 years. Low correlation allows traders to sell index volatility while buying single-stock volatility. However, this trade can unwind rapidly if stocks begin to move in tandem. In March, implied correlation surged from 15 to 40 within weeks. JPMorgan’s dispersion index posted its worst month since 2011. Nvidia’s four largest customers account for 44% of its revenue. These mega-caps dominate the index, yet their daily correlations remain low.
European Gas Storage Falls Below Seasonal Average
Europe enters the 2026/27 heating season in its most vulnerable position since 2011. EU gas storage stands at 65%. The five-year average for this period is 82%. The EU target is 90%. This is a structural supply problem, not just a weather-driven squeeze. Disruption in the Strait of Hormuz has taken Qatari LNG off the market. Qatari LNG exports are down by roughly 96%. This depletion leaves the continent with limited buffer capacity for winter demand.
