Analysis: US Treasury Expands Bond Buybacks, Signaling Reluctance to Let Hard Financial Tightening Hurt AI and the Broader Economy

Odaily News – China Securities Co., Ltd. (CSC) released a report stating that in the A-share market, margin financing and ETF fund flows are moving in opposite directions. While the clearing process is not yet complete, volatility has narrowed. The sell-off pressure from investors who bought the dip earlier and are now looking to break even may constrain the pace of any rebound. The 10-year U.S. Treasury yield is fluctuating at a high level of 4.7%, reflecting two factors: embedded inflation expectations and AI-related debt financing pushing up long-end rates. The U.S. Treasury's expanded bond buybacks signal that policymakers are reluctant to allow a hard tightening of financial conditions to harm AI and the broader economy, keeping the suppression of equities from interest rates relatively manageable. On the strategy front, the recovery market has a floor at the bottom and a ceiling at the top. The policy backstop intent is clear, but incremental capital has yet to reach a consensus, and stock-market dynamics remain characterized by zero-sum trading among existing players. A stronger catalyst is needed for the index to break out to the upside.