US Treasury Buys Long-Term Bonds, But Not as Much as Expected

The US Treasury is continuing to buy long-term bonds, but the volume is below expectations. This move is prompting markets to reassess the credit markets' ceiling. Over the past 10 days, $10.5 billion in bonds were purchased, down 15% from last month. Analysts attribute this slowdown to concerns about the US economy slowing down. The Federal Reserve's (Fed) interest rate policies are also influencing bond prices. If the Fed continues to hike rates, long-term bond prices could fall further, increasing borrowing costs for companies like Nvidia. Additionally, the escalating China-US trade tensions are driving up the prices of rare earth elements, which could impact semiconductor machine manufacturers like ASML. Markets are closely watching how these developments will affect the chip supply chain.

The reduced bond-buying by the Treasury may signal that markets are becoming more sensitive to risks in the chip sector. This could force companies like TSMC to reassess their cost structures.