World Blog by humble servant.Lower Yields and Stock Buybacks

Lower Yields and Stock Buybacks
By Humble ServantMarket Context: Falling Yields and Lower RatesBond yields have been volatile but trending downward into September 2025, with the 10-year US Treasury yield dropping to around 4.23% in late August before edging up to 4.28-4.30% this month. This suggests expectations for lower interest rates, possibly with Federal Reserve cuts soon, reducing borrowing costs and shifting capital toward equities. Historically, falling yields make bonds less appealing, driving money into stocks for better returns, especially when paired with buybacks that lift share prices.How Buybacks Fit In: Money Flows and Market SignalsStock buybacks channel money flows in a low-rate environment. Companies use cheap borrowing or cash reserves to repurchase shares, cutting supply and boosting earnings per share (EPS), a key stock price driver. In 2025, US firms announced over $1 trillion in buybacks by August, a record pace, with projections of $1.1-1.3 trillion for the year. Tech and finance lead this surge, reflecting strong balance sheets and confidence despite economic uncertainty. Q1 2025 saw $293 billion in repurchases, up 20.6% from the prior quarter, lifting EPS growth.In a falling-yield scenario, buybacks signal the next stock market upswing by:

• Attracting inflows: Lower rates push capital from bonds to stocks, with buybacks creating scarcity and price pressure.
• Supporting indices: The S&P 500, up ~10% YTD despite a recent dip, benefits from concentrated buyback activity, with the top 20 companies driving nearly half of Q1 repurchases.
• Dictating flows: As noted, “money flow always dictate”—buybacks recycle cash into the market, fueling rallies. July’s $166 billion in announcements, a monthly record, suggests more gains as earnings blackouts lift, especially if rates fall further.

Risks include heavy reliance on mega-caps, potential recession signals (some cite 90% odds), and buybacks prioritizing shareholders over R&D. Still, this setup often precedes bull runs, as seen post-2020.Big Tech Buyback PlansBig tech dominates 2025 buybacks, using vast cash reserves to reduce shares and support prices. Key players include:

Company	Ticker	Buyback Amount (2025)	Notes
Apple	AAPL	$100B announced; $26.2B executed in Q1	Largest program; ~3% of market cap; 3.45% total “yield” with dividends.
Alphabet	GOOGL	$70B announced	Cash flow drives repurchases.
Nvidia	NVDA	$60B announced; $15.6B executed in Q1	AI boom fuels buybacks.
Meta	META	$17.6B executed in Q1 (more planned)	Top Q1 buyer after Apple.
JPMorgan	JPM	$50B announced	Banking giant, overlaps tech impact.

The “Magnificent Seven” (including Microsoft, Amazon, Tesla) account for ~25% of S&P 500 Q1 buybacks, signaling sustained upside if rates drop.S&P 500 Buyback LeadersBeyond tech, financials and industrials drive S&P 500 buybacks, with financials surging 41% to $59.4B in Q1, or 20% of the total. Notable companies include:

Company	Ticker	Buyback Amount (2025)	Sector	Notes
Goldman Sachs	GS	$40B announced	Financials	Post-stress test surge.
Wells Fargo	WFC	$40B announced	Financials	Banking sector strength.
Bank of America	BAC	$40B announced	Financials	Boosted after Q2.
Visa	V	$30B announced	Financials	Steady repurchasing.
TJX Companies	TJX	$2-2.5B planned	Consumer Discretionary	Retail focus.
Shell	SHEL	$3.5B planned	Energy	Oil sector contributor.
Domino’s Pizza	DPZ	Ongoing	Consumer Discretionary	Recent program.

| Broadcom | AVGO | $10B announced | Technology | Chip maker resilience. |S&P 500 authorizations hit $750B in the first half, with $300B executed. Top firms drive 48.4% of Q1 activity, but September’s historical weakness (down in 6 of the last 10 years) poses risks.Market OutlookLower yields and record buybacks set the stage for the next stock market upswing, as money flows drive momentum. However, concentration in mega-caps and seasonal risks could challenge gains. If rates keep falling, buybacks may amplify rallies, but favoring shareholders over reinvestment could limit long-term growth.