"Financial Markets Lacking a 'Firefighter': U.S. Buyback Disappoints, Soaring Oil Prices Shake Treasury Yields [Weekend Money]"

Response Falls Short Despite Tripling of Buyback Plan
Brent Crude Surpasses $100
Bessent May Unveil Surprise Move

Long-term U.S. Treasury yields and international oil prices have surged again, putting renewed pressure on financial markets. Although the U.S. Department of the Treasury has attempted to intervene by tripling its Treasury buyback (repurchase) program, it failed to meet market expectations. Meanwhile, surging oil prices caused by heightened military tensions between the United States and Iran have led to criticism that there is no 'firefighter' available to calm the instability in financial markets.

According to iM Securities, the U.S. Department of the Treasury announced that it would triple the buyback limit for Treasuries with remaining maturities of 10 to 20 years, from a maximum of $2 billion per round to $6 billion per round. However, this move is seen as insufficient to curb the sharp upward movement in long-term Treasury yields. Financial markets, which had secretly hoped for large-scale measures exceeding $10 billion, expressed disappointment.

The renewed surge in international oil prices also diminished the effect of the buyback program. As military tensions escalated between the United States and Iran, the risk of passage through the Strait of Hormuz and the Red Sea resurfaced. As a result, Brent crude prices surpassed $100 per barrel, reaching their highest levels in four months, while West Texas Intermediate (WTI) crude jumped 3.25% from the previous day to $96.05, drawing close to the $100 mark.

Expectations for a policy reversal (TACO) by U.S. President Donald Trump, which had been closely watched by the market, also failed to materialize. President Trump commented that "the war will not end until after the U.S. midterm elections in November," dashing hopes that there would be oil price stabilization through a resolution before the elections. Both President Trump and Secretary Bessent signaled that they would not play a ‘firefighting’ role to stabilize oil prices and Treasury yields for the time being. On a slightly positive note, the launch of OpenAI's 'GPT-6 Astra' helped propel SK hynix ADR Boost shares to their highest level since listing, and the semiconductor industry continues to show robust momentum.

However, it remains uncertain whether the semiconductor index can maintain its current strength if U.S. long-term Treasury yields and oil prices climb further. In particular, if WTI prices continue to exceed the critical psychological threshold of $100, and U.S. 10-year Treasury yields—currently around 4.8%—rise above 5%, financial markets such as equities could once again face heightened correction risks. With no effective solution in sight to stabilize Treasury yields and oil prices, the September Federal Open Market Committee (FOMC) meeting is more likely to increase interest rate uncertainty than to calm market anxieties.

Park Sanghyun, researcher at iM Securities, said, "Ahead of the November midterm elections, neither President Trump nor Secretary Bessent are likely to sit idly by in the face of financial market and oil price instability," adding, "It cannot be ruled out that an unexpected policy move could emerge."

This content was produced with the assistance of AI translation services.