US EQUITY OPEN: Indices mixed as long-end yields fall following US Treasury buyback announcement

US EQUITY OPEN: Stocks have opened mixed, with the SPX up around 0.4% while the NDX is -0.3%. Underlying strength is more encouraging, with the equal-weight S&P 500 ETF firmer by over 1.3%. Sectors are predominantly higher, with notable outperformance in Health Care, led by gains in Merck (MRK) and Moderna (MRNA) after their Phase 3 trial showed their vaccine succeeded in preventing cancer from returning or spreading in high-risk melanoma patients. Technology, Communication Services and Industrials lag, limiting gains in the headline indices despite the positive breadth.

Broader sentiment is being supported by the US Treasury announcing it will increase the amount of long-end securities it buys back, following the large amount of offers submitted at recent buyback operations. The move should provide additional support for liquidity at the long end following the pronounced recent steepening of the Treasury curve and has helped ease some of the pressure from elevated yields on the broader equity space.

The Treasury announcement supported T-notes, particularly at the long end, resulting in a flatter yield curve. Lower yields are weighing on the Dollar and supporting G10 currencies, particularly the CHF and Yen, while the Kiwi also outperforms and gains against the Aussie.

Oil prices are marginally firmer amid further incidents reported in Al Mukha, Yemen. Meanwhile, Iran said a new passage through the Strait of Hormuz will be announced with Oman.

Attention ahead turns to the FOMC Minutes.

• Merck & Co. (MRK) / Moderna (MRNA): Companies' vaccine succeeds in preventing melanoma from returning
• Analog Devices (ADI): EPS and revenue topped Wall Street expectations, as did next-quarter outlook
• Toll Brothers (TOL): Top and bottom line beat
• Lowe's Companies (LOW): Revenue and comparable sales light, as was top-line FY guidance
• Estée Lauder Companies (EL): Strong results, with quarterly metrics beating expectations and FY outlook lifted
• Nebius Group (NBIS): To offer USD 4.5bln of convertible senior notes
• Samsung Electronics: Reportedly raises prices for advanced contract chipmaking services by 10-15% for new orders
• SK Hynix: To buy back KRW 40tln in treasury shares

Treasury buyback operations sit in the liquidity-support category rather than the QE category: they retire off-the-run paper with issuance of on-the-run supply, so the signal is about market functioning in the long end, not balance-sheet expansion. Upsizing operations in response to heavy offer submissions follows the established pattern of the programme being calibrated to dealer willingness to sell, and prior episodes of enlarged buybacks have tended to compress the off-the-run concession and flatten the curve at the margin rather than re-rate the level of yields durably. The transmission here runs from the long-end rally through duration-sensitive equities and the dollar, with the equal-weight versus cap-weight divergence and the megacap tech lag consistent with a rates-driven session rather than a breadth-driven one. The distinction worth drawing is between a one-day liquidity bid and a shift in the supply picture; buyback sizing does not alter the deficit-financed coupon calendar that has driven the steepening. The follow-ons are the reception at the next coupon auctions, whether the bid-to-cover and tail behaviour confirm genuine long-end demand, and the FOMC Minutes later in the session, which in past sequences have either reinforced or faded rate moves of this kind depending on the balance-of-risk language.