US Treasury Buy-Backs Face Hurdles as Bond Yields Surge Amid Deficit Concerns
· Business · Hindustan Times, The Economist, Bloomberg
US Treasury Secretary Scott Bessent announced plans on August 19th to buy back tens of billions of dollars in long-dated government debt to push bond yields lower. Global government-bond yields have surged this year, including a 0.6 percentage point increase on American ten-year Treasuries, driven by sticky inflation, post-pandemic deficits, and surging oil prices from conflict in the Middle East. Private borrowing for artificial intelligence data centres has further increased capital costs for governments and corporations alike. America's budget deficit currently sits at 6% of GDP with federal debt surpassing $40 trillion, while the Congressional Budget Office projects further increases. The rising yields directly affect key voter costs ahead of the upcoming midterm elections, pushing thirty-year mortgage rates higher.
Why it matters
Rising US bond yields drive up mortgage rates and borrowing costs for American consumers and the broader global economy just weeks ahead of the midterm elections.
Read the original report — Hindustan Times
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