Stock Market Update

[BRIEFING.COM] The major averages have narrowed their gains with the S&P 500 now up just 0.3% after early strength lifted the benchmark index back to its closing level from Monday.

The early gains followed an announcement from the U.S. Treasury that it is increasing its buyback capacity for Treasuries of longer tenors by at least twice the current amount. This increase will be effective in time for the Treasury's scheduled buybacks for September through early November. Deutsche Bank noted that the Treasury's decision is akin to ‘Operation Twist' where proceeds from short-term bill sales will be used to support the longer end, resulting in some relief in yields on longer tenors. It is also likely that these moves are being made as part of a buffer in the event of an energy shock later this year that could result from a prolonging of the U.S.-Iran conflict.

Treasuries have dipped from their morning highs with shorter tenors now in the red while the long bond is hanging onto the bulk of today's gain with its yield down eight basis points at 5.20%.