ASX set to rise ahead of jobs data, Wall Street higher as US launches bond buyback; Moderna rockets 177% on cancer trial results

US stocks rose after the US Treasury Department announced a move that could ease pressure coming from the bond market. Strong profit reports for the spring from Estee Lauder, Target and other US companies also helped support Wall Street.

The S&P 500 climbed 0.2 per cent for its first gain in four days after setting its all-time high last week. The Dow Jones Industrial Average added 119 points, or 0.2 per cent, and the Nasdaq composite ticked 0.2 per cent higher.

The Australian sharemarket is set to edge higher, with futures at 5am AEST pointing to a rise of 13 points, or 0.1 per cent, at the open. The ASX fell for a sixth-straight session on Wednesday. The Australian dollar was stronger at US71.24¢. A busy day on the reporting season calendar is ahead, with Fortescue and Northern Star among companies due up.

Financial markets have come under growing strain as Treasury yields charged higher through the summer on worries about inflation, big government debts and other factors. That makes borrowing money more expensive for everyone, which slows the economy and undercuts prices for stocks and other investments.

But Treasury yields fell in the morning after the US Treasury Department said it will at least double the size of its planned purchases of longer-term Treasurys from September 9 through November 4. The department said it’s doing so “to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants.”

These longer-term 10- and 30-year Treasurys are less beholden to the Federal Reserve, which can raise or lower very short-term interest rates for overnight loans. President Donald Trump has lobbied for the Fed to lower interest rates to help the economy.

Longer-term yields are set instead by investors in the bond market, who decide how much interest they need to get paid by the US government in exchange for lending it money. And recently, they have been demanding more in interest to make up for the growing risks of high inflation, continued government deficits and other factors.

After the Treasury department’s announcement, the yield on the 10-year Treasury fell to 4.64 per cent from 4.71 per cent late Tuesday. It, though, remains well above its 3.97 per cent level from before the war with Iran sent oil prices and worries about inflation much higher.

The 30-year Treasury yield, which recently touched its highest level since 2007, fell more sharply to 5.18 per cent from 5.28 per cent late Tuesday.

The relief could be short lived, some analysts warn. The amount of bonds the US Treasury is proposing to repurchase is a fraction of the overall total.

“The boost to buybacks is also happening in a world of challenged Fed credibility,” according to strategists at BNP Paribas.