US02Y4.24[Abridged from DeskNote 2026.08.20]

The cross-asset reaction to Treasury's expanded long-end liquidity-support buybacks was immediate. Long-end yields fell sharply, DXY dumped, USDJPY faded, and gold, silver, and B** rallied.

As I have said repeatedly, Trump cares about only four things: 1) equity-market performance; 2) inflation prints; 3) Treasury yields; and 4) approval ratings. Of the four, yields matter most. He has struggled to keep oil contained, and oil staying elevated for longer has continued to push inflation expectations and long-end yields higher. As the US30Y yield reached a new 20-year high, he was forced to have Bessent pull a TACO on long-end yields by expanding Treasury's long-end buyback support.

The move immediately relieved pressure on long-duration assets, but I would not mistake it for a change in the underlying trend. As we have seen repeatedly in USDJPY, temporary policy measures rarely reverse a fundamentally driven move. Reversing the rise in long-end yields would require either normalization through the Strait of Hormuz or a stringent budget. I see little prospect of either.

That relief has already faded. US10Y and US30Y yields have moved back toward their highs, while US2Y has also moved higher.

Technical

US2Y is testing the short-term ascending trendline. As long as it holds, 4.4% remains in play. A sustained break below it puts 4% back in play.