21/08/2026 03:47 AST
Asian markets rallied on Thursday after the US Treasury said it would "at least double" the amount of long-term bonds it issues in an effort to push down borrowing costs, which surged this week to near two-decade highs. The surprise move gave a much-needed lift to investors worried about a spike in 10- and 30-year yields.
That spike had been driven by the prospect of inflation staying elevated, heavy government borrowing and possible Federal Reserve interest rate hikes. Soon after the announcement, US equities reversed losses to end higher while the dollar tumbled against its peers, as traders took relief from a fresh bout of selling. The yield on the 30-year US Treasury had hit its highest level since June 2007 on Tuesday, before the global financial crisis.
"This is probably more about the signal the administration wants to send to the market than the size of the operation - it's small potatoes vs the $40 trillion US government debt," Neil Wilson of Saxo Markets wrote. "I see it as a very strong sign that the Treasury has decided higher US yields are unacceptable, and that the recent blowout in the long end is undesirable. Clearly, Donald (Trump) is not happy yields have blown out."
The mood lifted Asia, where technology firms that rely on debt to fund huge artificial intelligence investments had been pummeled on Wednesday. Seoul led the advance after bearing the brunt of the previous day's selling. The Kospi jumped more than six percent at one point as chipmaker SK hynix rocketed more than 12 percent, helped by the company's announcement on Wednesday of a $29 billion share buyback. Samsung climbed almost nine percent.
Technology firms also pushed Tokyo higher, while Hong Kong, Shanghai, Sydney, Wellington and Manila were all well up. The dollar stabilized after sinking against its peers, and gold jumped back above $4,500 for the first time since early June.
"The key question now is whether the fall in yields can last," said Fiona Cincotta of City Index. "If oil prices remain elevated and concerns over US borrowing continue, pressure on the long end of the Treasury curve could return."
Crude prices have risen over the past two weeks as hopes fade for a US-Iran deal to reopen the Strait of Hormuz, with the deadline for an agreement falling this week. Washington's naval blockade of Iran's ports and Tehran's attacks on commercial ships are continuing, and Iran's armed forces on Wednesday warned Gulf countries against assisting the US military. Both sides recently said messages were being exchanged, but Trump insisted on Tuesday that talks were off, taunting Iran with a social media post describing the strait as a "new US territory".
Minutes from the Federal Reserve's July meeting showed many policymakers believe rate hikes will be necessary if inflation does not decline. Three of the 12 voting members of the Federal Open Market Committee dissented from the decision to hold rates steady, calling instead for an increase, and noted that economic activity had continued to expand at a "solid pace" while business investment remained concentrated in the AI industry.
Attention now turns to next week's annual gathering of central bankers, economists and finance chiefs at Jackson Hole, Wyoming, where investors will look for an indication of Fed chief Kevin Warsh's thinking on rates.
Key figures at around 0230 GMT
Tokyo - Nikkei 225: UP 1.0 percent at 65,982.49
Hong Kong - Hang Seng Index: UP 0.7 percent at 25,672.00
Shanghai - Composite: UP 0.4 percent at 3,909.94
Dollar/yen: UP at 158.43 yen from 158.27 yen on Wednesday Euro/dollar: UP at $1.1680 from $1.1672 Pound/dollar: UP at $1.3607 from $1.3605 Euro/pound: UP at 85.84 pence from 85.80 pence
West Texas Intermediate: UP 0.3 percent at $86.07 per barrel
Brent North Sea Crude: UP 0.2 percent at $91.82 per barrel
New York - Dow: UP 0.2 percent at 53,463.05 (close)
London - FTSE 100: UP 0.1 percent at 10,743.35 (close)
AFP
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