U.S. government debt surpassed $40 trillion this week, doubling its level from a decade ago, as the Treasury doubled bond buybacks ahead of midterm elections. The milestone underscores the rapid expansion of federal borrowing amid persistent fiscal deficits.
Energy markets remained volatile as European diesel prices surged more than 70% since the six-month-old Iran conflict began, while U.S. gasoline prices climbed roughly 60% over the same period. The International Energy Agency estimates that Middle Eastern refining capacity of 9.6 million barrels per day has seen over 20% disrupted by the war, compounded by Ukrainian strikes on Russian energy infrastructure and the ongoing closure of the Strait of Hormuz.
Trade negotiations between the U.S. and Canada, aimed at averting Washington’s planned tariff increase, were postponed to Saturday, extending the window for a potential resolution. The Canadian dollar strengthened sharply on Wednesday following reports of progress in the talks.
Market attention on Thursday focused on U.S. economic data, including weekly jobless claims and the Philadelphia Fed’s August manufacturing index, released at 8:30 a.m. EDT. A 30-year TIPS auction followed at 1 p.m. EDT. Corporate earnings from Walmart were also due, while St. Louis Fed President Alberto Musalem was scheduled to deliver remarks.
The U.S. dollar declined broadly as investors digested the Treasury’s bond buyback strategy, which has reshaped debt management ahead of the midterm elections. Meanwhile, Moderna’s stock nearly tripled after the company announced a breakthrough in skin cancer vaccine development in partnership with Merck, highlighting volatility in pharmaceutical equities.
