The Treasury Will More Than Double Its Government Debt Repurchases. Stocks Edged Up.

Stocks edged up on Wednesday after the Treasury Department said it will increase buyback options for longer-term bonds.

The S&P 500 climbed 0.22%, while the Dow Jones Industrial Average did so 0.22%. The tech-heavy Nasdaq Composite gained 0.16%.

Yields on longer-term U.S. debt declined following the announcement as well. The 30-year Treasury declined 9 basis points to 5.195% after touching a 19-year high on Tuesday.

The Treasury will specifically target the 10-to20-year and 20-to-30 year portion of the market, which had practically not seen buyers since late June. The maximum size of repurchases will be of at least $4 billion, the department said.

"This increase in buyback operation sizes reflects Treasury's desire to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants, as evidenced by the significant volume of high-quality offers Treasury routinely receives in longer-dated buyback operations," the department said.

Elsewhere, Federal Reserve officials said they would need to hike interest rates unless inflation cools over the next months, the central bank's minutes showed.

"Many participants assessed that policy tightening would likely be necessary if inflation did not decline," reads a passage of the meeting's summary.

"Some participants commented that financial conditions might not currently be sufficiently restrictive to facilitate a return of inflation to 2 percent."

Three members of the Federal Open Market Committee voted to increase rates in the July meeting. The remaining nine voted to maintain rates in the 3.5%-3.75% range.

The minutes addressed the vote of the dissenters, who claimed that hiking rates "would likely help forestall the need for a steeper and potentially more costly sequence of tightening moves at a later stage."

However, a recent run of softer inflation data combined with signs of a cooling labor market has weakened the case for raising interest rates at the Fed's September meeting. But inflation is still above the Fed's target and unemployment too low to make the aggressive rate cuts demanded by President Donald Trump an obvious alternative.

That leaves the Fed increasingly positioned to keep borrowing costs exactly where they are.

Bets about the Fed's next move were largely unchanged after the minutes. The CME Group's Fed Watch tool showed a 65.4% chance of a rate hold, slightly higher than Tuesday's 63.9%. Chances of a rate hike now stand at 34.6%, compared to Tuesday's 36.1%.