Can Bessent’s $4 bn buyback bend the long end?

S&P 500 +0.21% to 7,707.98

US 10-year yield -6.0 basis points to 4.650%

Spot gold +4.33% to $4,521.09 an ounce

DXY -0.86% at 98.80.

What to look out for today

Companies reporting on Thursday, 20 August: Deere, Ross Stores, Walmart

Key data to move markets today

EU: German PPI, German Bundesbank “Buba” Monthly Report and a speech by De Nederlandsche Bank President Olaf Sleijpen

UK: GfK Consumer Confidence 

USA: Initial and Continuing Jobless Claims, Philadelphia Fed Manufacturing Survey and a speech by St Louis Fed President Alberto Musalem

JAPAN: National CPI and National Core CPI

Global Macro Updates

Bessent attempts to intervene, again. The US Treasury has expanded support for longer-term bonds, although some investors questioned whether the buyback plan would have more than a short-term effect on the bond market.

The US government has been repurchasing older Treasuries for the past two years. Officially, the programme is intended to support liquidity, rather than reduce yields on newly issued bonds, by limiting upward pressure on older, less actively traded securities. On Wednesday, the Treasury said it would raise the maximum amount of 10-year to 30-year Treasurys it can purchase in a single operation from $2 billion to at least $4 billion, beginning 9 September and continuing at least through 4 November. US government bonds rallied after the announcement.

At a sustained $4 billion pace, the Treasury would repurchase about $128 billion of 10-year to 30-year Treasurys over a year. That would represent nearly 30% of expected issuance in those maturities, but only 2.4% of the outstanding debt in the same segment.

By comparison, the federal budget deficit reached $432 billion in July alone, limiting the Treasury’s capacity to retire debt. In practical terms, long-term bonds can only be repurchased by issuing additional short-term debt.

Some analysts argued that the expanded buybacks appeared politically motivated, with the objective of lowering rates ahead of the midterm elections. However, longer-term borrowing costs will probably remain high amid concerns about inflation and rising US deficits. A sustained decline in long-term yields would likely require meaningful deficit reduction, which appears unlikely in the current political environment, especially as the US President has extended tax cuts and pledged to massively increase defence spending to $1.5 tn a year.

No surprises from July FOMC minutes. The minutes did not materially alter the policy narrative. Many Fed participants said further tightening could still be needed if inflation failed to decline, while several noted that price pressures remained broad-based. However, most expected inflation to ease over the rest of the year.

Inflation forecasts were little changed from June, although the economic outlook was slightly weaker and the labour market remained stable. Fed Chair Kevin Warsh also requested feedback on reducing the FOMC schedule to six meetings per year. The minutes were viewed as somewhat stale following softer July data, leaving attention on Warsh’s Jackson Hole symposium speech next week.

US Stock Indices

Dow Jones Industrial Average +0.22%
Nasdaq 100 -0.22%
S&P 500 +0.21%, with 6 of the 11 sectors of the S&P 500 up

Wall Street rebounded after the Treasury announced plans to increase buybacks of longer-dated bonds, a move viewed as an effort to ease borrowing costs after yields reached multi-decade highs. The S&P 500 advanced +0.21%, or 16.22 points, to 7,707.98, while the Nasdaq Composite rose +0.16%, or 41.38 points, to 26,331.09. The Dow Jones Industrial Average gained +0.22%, or 119.65 points, to 53,463.05.

In corporate news, SK Hynix announced after the close in South Korea that its board had approved a 40.004 trillion won share buyback, equivalent to $28.31 billion, for cancellation. The planned repurchase covers 24.07 million shares, or about ~3.3% of total shares outstanding. It will run from 20 August through 19 November. The company also said it intends to raise shareholder returns, including cash dividends, to more than fifty percent of cumulative FCF for 2025 - 2027, compared with its previous commitment to return up to fifty percent of cumulative FCF.

Moderna and partner Merck said Wednesday that an experimental mRNA-based vaccine succeeded in preventing cancer from recurring or spreading in a study of high-risk melanoma patients, potentially opening the door to a new life-extending treatment for thousands of patients diagnosed each year with the deadly skin cancer. Moderna shares more than doubled, while Merck’s stock reached an all-time high.

The study met its primary endpoint by extending the time before cancer returned compared with Keytruda alone and also achieved a secondary endpoint by reducing the risk of the disease spreading to other organs. The results mark the first successful late-stage trial of a personalised mRNA cancer therapy, validating decades of research into custom treatments designed around an individual tumour’s mutations.

The Wall Street Journal reported that OpenAI told investors that revenue rose 18% to $6.7 billion in Q2. The company’s operating loss widened to $12.3 billion from $9.3 billion in Q1. By comparison, Anthropic more than doubled revenue to $11.6 billion over the same period, surpassing OpenAI’s sales for the first time.

Google reached an agreement with Marvell Technology to develop custom AI chips, with an option to purchase up to $12.2 billion of Marvell shares. Marvell said Wednesday that the companies will collaborate on specialised hardware for Google’s AI chips, known as tensor processing units (TPU). 

Under the expanded partnership, Marvell issued a warrant allowing Google to buy up to 58.9 million shares at $206.58 each, according to a regulatory filing. Marvell also supports hyperscalers, including Amazon, in designing specialised AI accelerator chips, offering an alternative to Nvidia’s general-purpose graphics processing units. 

Corporate Earnings Reports

Posted on Wednesday, 19 August from The Pulse, our real-time AI-driven news tool. Available exclusively on the EXANTE Web Platform

Lowe’s reported Q2 earnings. Non-GAAP EPS was $4.40 vs $4.22 consensus, a beat, while revenue of $25.96bn missed the $26.16bn estimate, up +8.3% y/y. Comparable sales rose +0.2%, with online sales up +15.7%. The company cut its FY26 guidance: total sales now $92bn (from $92bn-$94bn) and adjusted EPS of ~$12.25 (from $12.25-$12.75). CEO said: “Sustained growth in Pro, Online and Home Services led to our fifth consecutive quarter of positive comp sales, despite pressure in discretionary DIY spending.” Separately, Lowe’s partnered with Synchrony and OpenAI for in-ChatGPT payments via store-branded cards.

Target reported Q2 FY2026 results ahead of expectations. Adjusted EPS came in at $4.11, beating the $2.30 consensus, while revenue rose +5.3% y/y to $26.54bn, surpassing estimates of $25.5bn. Comparable sales grew +3.8%, and gross margin expanded 470bps to 33.7%. The company raised its full-year FY2026 guidance: adjusted EPS now $9.90–$10.90 (vs prior $7.50–$8.50) and net sales growth of about 5%. Results included $994mn in pretax tariff refund benefits. Target CEO said the quarter builds on momentum from Q1, reinforcing confidence in the company's strategy.

Analog Devices reported Q3 fiscal 2026 results. Revenue was $4.02bn (vs $3.92bn expected), up +40% y/y. Adj EPS was $3.45 (vs $3.33 expected), up +68% y/y. Adjusted operating margin was 50.0%, expanding +780bps y/y. Q4 guidance includes revenue of $4.3bn +/- $100mn (vs $4.07bn expected) and adj EPS of $3.86 +/- $0.15. Segment revenue: Industrial $2.0bn (+53% y/y), Automotive $998.2mn (+16%), Communications $654.5mn (+84%), Consumer $397.2mn (+6%). Operating cash flow was $5.5bn with FCF of $4.9bn. CEO Vincent Roche said the company exceeded the midpoint of its outlook, capitalising on broad-based demand, and cited a record Q4 outlook.

European Stock Indices

CAC 40 -0.09%
DAX -0.14%
FTSE 100 +0.14%

Commodities

Gold spot +4.33% to $4,521.09 an ounce
Silver spot +5.72% to $66.92 an ounce
West Texas Intermediate +0.86% to $86.00 a barrel
Brent crude +0.30% to $91.57 a barrel

Gold advanced on Wednesday, reaching its highest level in more than two-and-a-half months after the US Treasury unexpectedly announced additional liquidity support.

Spot gold rose +4.33% to $4,521.09 per ounce, breaking above its 100-day moving average near $4,381.

The US dollar index declined -0.86%, making dollar-denominated gold less expensive for holders of other currencies.

Spot silver also strengthened, rising +5.72% to $66.92 per ounce.

Crude oil prices rose on Wednesday to their highest level in nearly four weeks, supported by escalating Middle East tensions after the UAE suspended financial and economic transactions with Iran and traffic through the Strait of Hormuz remained slow.

Brent crude futures settled at $91.57 per barrel, up $0.27, or +0.30%, while US WTI crude futures rose $0.73, or +0.86%, to $86.00 per barrel. Both benchmarks closed at their highest levels since 24 July.

The UAE said yesterday afternoon that it had halted all trade, commercial exchanges and financial transactions with Iran following recent attacks. The UAE has been a major financial and business hub for Iran in recent years and remains Iran’s largest trade partner. Separately, the Financial Times cited Iranian sources as saying that Tehran could target military sites in Europe if Trump escalates the war.

The Department of Energy’s Weekly Petroleum Status Report showed crude stockpiles increased by 4.1 million barrels, gasoline inventories rose by 688,000 barrels, and distillate stocks declined by 1.53 million barrels. This marked the third consecutive crude build, with inventories up 24.29 million barrels over that period.

Commercial crude stockpiles increased despite a 5.3 million-barrel Strategic Petroleum Reserve release. Jet fuel production held above 2.0 million bpd for a record 16th consecutive week, while refinery utilisation rose +1 percentage point to 97.2%, the highest in seven years, and remained above 95% for a record 11th consecutive week. Crude imports from Saudi Arabia averaged 9,000 bpd, imports from Iraq averaged 6,000 bpd and imports from Venezuela averaged 730,000 bpd.

Although Saudi Arabia supplies to the US remain effectively near zero, Bloomberg news reported that Saudi Arabia will provide full contractual volumes to at least three European refiners in September.

Ukraine’s campaign against Russia’s refining sector continued, with another plant reportedly hit. Separate reports showed that only 28.1% of gasoline stations in Russia had fuel available, down from more than 41.0% a week earlier.

After the oil close, Axios reported that stealth operations had been conducted in the Strait of Hormuz, enabling 15 to 20 tankers to pass through each night.

Note: As of 4 pm EDT 19 August 2026

Currencies

EUR +0.87% to $1.1676
GBP +0.54% to $1.3605
Bitcoin +7.93% to $69,706.13
Ethereum +19.53% to $2,285.89

The US dollar weakened against major peers on Wednesday, pressured by lower Treasury yields and improved demand for other major currencies. The US dollar index fell -0.86% to 98.80, declining to its lowest level since late May.

The euro rose +0.87% against the US dollar to $1.1676, reaching its highest level in more than two-and-a-half months.

Sterling gained +0.54% against the US dollar to $1.3605, its strongest level since 11 May.

The Japanese yen strengthened +0.92% to ¥156.65 per US dollar.

Fixed Income

US 10-year Treasury -6.0 basis points to 4.650%
German 10-year Bund +0.4 basis points to 3.280%
UK 10-year Gilt -3.3 basis points to 5.052%

Long-dated US Treasury yields held earlier declines on Wednesday afternoon, as demand improved after the Treasury Department said it would double liquidity-support buyback operations for longer-dated notes and bonds.

The US Treasury sold $18.06 billion of 20-year bonds, with the auction drawing a high yield of 5.204%, up from 5.163% in the prior month and the highest yield for this maturity since October 2023. The bid-to-cover ratio was 2.53x, below the previous six-month average of 2.62x.

The US 10-year Treasury yield declined -6.0 bps to 4.650%, while the 30-year yield fell -8.9 bps to 5.195%.

The 2s10s yield curve flattened by 4.7 bps to 47.7 bps.

The 2-year US Treasury yield, which typically tracks Fed funds rate expectations, declined -1.3 bps to 4.173%.

Pressure on eurozone government bonds eased modestly on Wednesday.

Germany’s 10-year yield rose +0.4 bps to 3.280%, reaching a 15-year high. The 30-year yield climbed to its highest level since 2011 at 3.787% before finishing down -1.0 bps on the day at 3.762%.

French 10-year yields rose above 4.130% earlier in the session, their highest level since 2008, before ending -0.1 bps lower at 4.119%. Italian 10-year BTP yields also briefly moved above 4.100%, their highest level since March, before closing -0.9 bps lower at 4.068%.

Money markets priced in roughly 45 bps of additional ECB tightening this year, up from 40 bps on Friday.

Note: As of 4 pm EDT 19 August 2026

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