El-Erian: US Treasury action may expand yield control

The U.S. Treasury announced an increase in the maximum amount for long-term bond buybacks to support liquidity and stimulate the longer-term bond market. The Treasury views this move as a sign of increased willingness to intervene more broadly in the bond market and to control the yield curve, a stance supported by economist Mohamed El-Erian, with long-term bond yields falling broadly after the announcement. This development also comes amid rising U.S. long-term bond yields, which have impacted domestic borrowing costs, at a time when the national debt is approaching $40 trillion. While supporting long-term bonds may help adjust the yield curve, it could also lead to greater reliance on short-term debt, putting additional pressure on its yields.

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