Goldman, Wells Fargo say Treasury buybacks unlikely to cut long rates

Strategists said longer-term yields will need weaker growth, lower inflation or fiscal consolidation to fall sustainably.

Strategists at Goldman Sachs, Wells Fargo and other Wall Street firms said US Treasury bond buybacks would do little to reverse the rise in long-term yields.

Yields on 10- and 30-year Treasuries briefly fell after the buyback announcement but rose again late last week. Analysts said the program would be ineffective unless Washington addresses the expanding budget deficit and inflation pressures.

Goldman strategists said larger long-end buybacks were unlikely to meaningfully reset rate levels. Wells Fargo said a slowdown in growth or inflation, less uncertainty over Federal Reserve policy, fiscal consolidation or weaker investment-grade issuance could push yields lower.

Societe Generale, Deutsche Bank and Scotiabank strategists said they expected the yield curve to keep steepening, with longer-dated yields rising relative to short-term rates.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.

Strategists at Goldman Sachs, Wells Fargo and other Wall Street firms said US Treasury bond buybacks would do little to reverse the rise in long-term yields.

Societe Generale, Deutsche Bank and Scotiabank strategists said they expected the yield curve to keep steepening, with longer-dated yields rising relative to short-term rates.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.