The Treasury Department has announced plans to double purchases of long-term government debt to at least $4 billion, aiming to stabilize a market experiencing surging borrowing costs and investor concerns over inflation and public debt. The move, starting Sept. 9, targets securities maturing in 10 to 30 years and has led to a rally in US government bonds and a decline in the dollar.

Government borrowing costs are rising across developed markets as investors demand more compensation for long-term debt amid persistent inflation, mounting fiscal deficits and increased corporate bond issuance. Average G7 bond yields recently reached their highest since 2008, while long-term US yields have approached two-decade highs. "People love to use the phrase 'higher for longer,'" Wells Fargo economists Tom Porcelli and Michael Pugliese wrote. "We would argue a far better characterization is normal for longer."

Federal Reserve officials indicated in July that an interest-rate hike might be necessary if inflation does not decrease, according to minutes of the Federal Open Market Committee's July meeting. The FOMC voted 9-3 to keep the federal funds rate at 3.5% to 3.75%, but dissenters favored a 25-basis-point increase. Since the meeting, inflation has remained above the Fed's 2% target, while employment has softened. The minutes also mention a discussion about possibly reducing the number of FOMC meetings each year.