Morgan Stanley’s Khanduja cuts long-bond bets amid US Treasury buybacks

Morgan Stanley’s Vishal Khanduja has reduced his scenarios against U.S. long-term bonds following Treasury Secretary Scott Bessent’s expanded buyback initiative. Bessent’s actions are aimed at supporting longer-dated Treasuries and mitigating rising yields, which have recently reached multi-decade highs. The buyback operations, focusing on the 10- to 30-year U.S. Treasury bonds, have been increased to at least $4 billion per operation. This move indicates official support for the long end of the Treasury curve, potentially easing interest rate pressures and impacting related asset markets, including gold. Key Takeaways The decision by Vishal Khanduja to reduce long-bond scenarios appears consistent with expectations of stabilized or decreasing yields due to Treasury buybacks. Market pricing suggests that these developments could potentially support gold prices as easing interest rates generally bolster non-yielding assets. The current market outlook for gold hitting higher price thresholds by the end of December remains low, with significant increases required for a shift in expectations. What to Watch Market participants should monitor upcoming actions by Scott Bessent and the U.S...