Key Takeaways:
Japan's Nikkei 225 rose 0.6% to 65,745.13 in early trade, tracking Wall Street's gains after the US Treasury expanded purchases of long-dated debt to calm a bond-market rout that had pushed yields to multi-decade highs.
"The US government calmed investors by announcing plans to expand purchases of long-dated debt, which eased liquidity concerns and signaled officials are prepared to step in to stabilize markets when borrowing costs rise too far, too fast," Axel Rudolph, chief technical analyst at IG, said.
Among the best performers on Japan's benchmark index, Shimano rose 4.9%, Daiichi Sankyo added 4.7%, and Shiseido climbed 4.0%. The dollar traded at 158.33 yen, compared with 159.15 around Wednesday's Tokyo market close, a softer greenback that supports exporter shares.
The Treasury said it will at least double the maximum size of its buyback operations, from $2 billion to at least $4 billion, across the 10- to 20-year and 20- to 30-year sections of the market. The accelerated program starts 9 September and runs until 4 November. The announcement sent the 10-year yield down 6 basis points to 4.647% and the 30-year bond tumbling 9 basis points to 5.196%.
Neil Wilson, investor strategist at Saxo UK, called the move "the Bessent Put," saying it signals the administration considers higher US yields unacceptable. "It's provided some immediate relief to the long end of the Treasury curve and eased some of the pressure building up lately," he said.
The relief in bonds removes some of the valuation pressure that had been compressing long-duration equities, with semiconductors and the higher-beta AI complex sitting directly in the firing line as the 30-year pushed above 5.3%. Treasury buybacks do not eliminate heavy government issuance or the fiscal premium, but they tell the market where Washington's pain threshold sits, traders said. The S&P 500 and Nasdaq each secured gains overnight as the buyback plan revived risk appetite, setting up the Nikkei's advance.
The buyback announcement marks the first meaningful signal that Treasury Secretary Scott Bessent is prepared to deploy more of the department's toolkit when duration starts misbehaving, after he had previously described the program as part of a broader set of options available if bond-market dislocations became problematic. For Japanese investors, the shift matters through the currency channel: a softer dollar and firmer yen compress the overseas earnings that many of the Nikkei's largest exporters convert back into domestic currency upon repatriation, even as the immediate relief in long-end yields supports equity valuations. With the benchmark still well below its record highs, the durability of the AI-driven rally and the path of US yields will determine whether the Nikkei can extend its advance in the sessions ahead.
This article is for informational purposes only and does not constitute investment advice.
