2 months ago
By Karen Brettell
Sept 2 (Reuters) - Concerns over America's fiscal outlook are mounting. Long-dated Treasury yields are at their highest levels since 2007, while the national debt has surpassed $40 trillion.
It is not the first time Washington has faced an imposing financing challenge. Treasury Secretary Scott Bessent says the U.S. can grow out of the debt. But history suggests that when the Treasury cannot rely on the usual mix of investors, instruments and market conditions, it has also created new methods to raise funds.
Here are six financing challenges Washington tackled and how it overcame them.
CREATE NEW BUYERS
#brettell #reuters
Sept 2 (Reuters) - Concerns over America's fiscal outlook are mounting. Long-dated Treasury yields are at their highest levels since 2007, while the national debt has surpassed $40 trillion.
It is not the first time Washington has faced an imposing financing challenge. Treasury Secretary Scott Bessent says the U.S. can grow out of the debt. But history suggests that when the Treasury cannot rely on the usual mix of investors, instruments and market conditions, it has also created new methods to raise funds.
Here are six financing challenges Washington tackled and how it overcame them.
CREATE NEW BUYERS
#brettell #reuters
2 months ago
By Karen Brettell
Aug 27 (Reuters) - Treasury Secretary Scott Bessent and Federal Reserve Chairman Kevin Warsh appear at odds over a question at the heart of U.S. financial policy. How hands-off can policymakers be when it comes to setting a price for money?
Warsh has advocated retreating from some of the central bank's longstanding communication policies in favor of letting markets do the heavy lifting, while Bessent has deployed a number of tools, some of them unusual, in the name of aiding market function.
The divide has come into view as the Trump administration steps up efforts to contain long-term borrowing costs — a push whose success appears unlikely to many ****** ysts and portfolio managers without concrete steps to contain the sprawling U.S. fiscal deficit.
That contrast in approaches will come into focus on Friday morning, when Warsh is scheduled to speak at the Fed's annual event in Jackson Hole, Wyoming. He wants bond markets to play a bigger role in setting rates, a stance arguably at odds with Bessent's interventionism. Meanwhile investors are seeking ****** urance that Warsh will act decisively against inflation in his first year leading a divided Fed.
#bessent #setting #contain
Aug 27 (Reuters) - Treasury Secretary Scott Bessent and Federal Reserve Chairman Kevin Warsh appear at odds over a question at the heart of U.S. financial policy. How hands-off can policymakers be when it comes to setting a price for money?
Warsh has advocated retreating from some of the central bank's longstanding communication policies in favor of letting markets do the heavy lifting, while Bessent has deployed a number of tools, some of them unusual, in the name of aiding market function.
The divide has come into view as the Trump administration steps up efforts to contain long-term borrowing costs — a push whose success appears unlikely to many ****** ysts and portfolio managers without concrete steps to contain the sprawling U.S. fiscal deficit.
That contrast in approaches will come into focus on Friday morning, when Warsh is scheduled to speak at the Fed's annual event in Jackson Hole, Wyoming. He wants bond markets to play a bigger role in setting rates, a stance arguably at odds with Bessent's interventionism. Meanwhile investors are seeking ****** urance that Warsh will act decisively against inflation in his first year leading a divided Fed.
#bessent #setting #contain
3 months ago
By Karen Brettell and Niket Nishant
Aug 21 (Reuters) - The dollar slipped on Friday, trading near a three-month low against the euro, as concerns mounted that the U.S. Treasury's plan to expand buybacks of longer-dated government debt could weigh further on the U.S. currency.
Treasury Secretary Scott Bessent said Thursday he may increase the government's repurchases of Treasuries even further, a day after the department surprised markets by pledging to at least double the size of its buybacks of longer-dated debt in an effort to rein in bond yields.
Long-dated yields jumped this week, with the 30-year yield reaching its highest level since 2007. Traders cited concerns over the deteriorating fiscal outlook, heavy issuance, geopolitical risk stemming from the war with Iran, and uncertainty over the Federal Reserve's policy path.
Analysts say that holding yields down will simply shift the burden of fiscal concerns onto the currency. And so far the strategy hasn't achieved its primary goal, as yields have crept back higher.
#longer #debt #karen
Aug 21 (Reuters) - The dollar slipped on Friday, trading near a three-month low against the euro, as concerns mounted that the U.S. Treasury's plan to expand buybacks of longer-dated government debt could weigh further on the U.S. currency.
Treasury Secretary Scott Bessent said Thursday he may increase the government's repurchases of Treasuries even further, a day after the department surprised markets by pledging to at least double the size of its buybacks of longer-dated debt in an effort to rein in bond yields.
Long-dated yields jumped this week, with the 30-year yield reaching its highest level since 2007. Traders cited concerns over the deteriorating fiscal outlook, heavy issuance, geopolitical risk stemming from the war with Iran, and uncertainty over the Federal Reserve's policy path.
Analysts say that holding yields down will simply shift the burden of fiscal concerns onto the currency. And so far the strategy hasn't achieved its primary goal, as yields have crept back higher.
#longer #debt #karen
3 months ago
By Karen Brettell and Iain Withers
NEW YORK, Aug 19 (Reuters) - Longer-dated global bond yields retreated from multi-decade highs, the dollar tumbled and gold jumped on Wednesday after the U.S. Treasury Department said it would boost liquidity support for longer-dated securities, following a broad selloff fueled by fears over swelling sovereign debt.
The U.S. Treasury Department said it would double the size of liquidity support buyback operations for longer-dated nominal coupon securities to at least $4 billion per operation from $2 billion.
U.S. long-dated government yields fell by as much as 10 basis points, dragging European government bond yields down too. U.S. long bonds had hit their highest in nearly 20 years on Tuesday, at nearly 5.34%, reflecting growing concerns about inflation and high debt.
"It is the first of many possible actions that the Treasury could take to support the long end," said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities. "A more permanent measure would be lowering long-end auction sizes."
#treasury #longer #support #bond
NEW YORK, Aug 19 (Reuters) - Longer-dated global bond yields retreated from multi-decade highs, the dollar tumbled and gold jumped on Wednesday after the U.S. Treasury Department said it would boost liquidity support for longer-dated securities, following a broad selloff fueled by fears over swelling sovereign debt.
The U.S. Treasury Department said it would double the size of liquidity support buyback operations for longer-dated nominal coupon securities to at least $4 billion per operation from $2 billion.
U.S. long-dated government yields fell by as much as 10 basis points, dragging European government bond yields down too. U.S. long bonds had hit their highest in nearly 20 years on Tuesday, at nearly 5.34%, reflecting growing concerns about inflation and high debt.
"It is the first of many possible actions that the Treasury could take to support the long end," said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities. "A more permanent measure would be lowering long-end auction sizes."
#treasury #longer #support #bond
3 months ago
By Karen Brettell
NEW YORK, Aug 20 (Reuters) - The U.S. dollar fell to a three-month low against the euro on Thursday before paring losses after the Treasury Department moved to calm a bond market selloff that had pushed long-end yields to their highest level since 2007.
The Treasury said Wednesday it would double the size of its buybacks of 10- to 30-year debt to at least $4 billion per operation, an attempt to steady a market that had been rattled by concerns over the growing U.S. fiscal deficit.
The announcement triggered a sharp selloff in the U.S. currency as traders worried about a worsening fiscal picture and potentially higher inflation, boosting gold and bitcoin in what some call the "debasement trade."
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was last down 0.01% at 98.82, with the euro up 0.01% at $1.1678. The single currency earlier reached $1.171, the highest since May 14.
#since #fiscal #karen
NEW YORK, Aug 20 (Reuters) - The U.S. dollar fell to a three-month low against the euro on Thursday before paring losses after the Treasury Department moved to calm a bond market selloff that had pushed long-end yields to their highest level since 2007.
The Treasury said Wednesday it would double the size of its buybacks of 10- to 30-year debt to at least $4 billion per operation, an attempt to steady a market that had been rattled by concerns over the growing U.S. fiscal deficit.
The announcement triggered a sharp selloff in the U.S. currency as traders worried about a worsening fiscal picture and potentially higher inflation, boosting gold and bitcoin in what some call the "debasement trade."
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was last down 0.01% at 98.82, with the euro up 0.01% at $1.1678. The single currency earlier reached $1.171, the highest since May 14.
#since #fiscal #karen
3 months ago
By Karen Brettell
NEW YORK, Aug 14 (Reuters) - The dollar fell on Friday after data showed U.S. retail sales unexpectedly declined in July, helping send the euro and sterling to multi-month highs, as traders weighed Federal Reserve policy.
Retail sales dropped 0.6% last month after an unrevised 0.2% gain in June. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, edging up 0.1%.
"We are clearly having signs of poor consumption," said Juan Perez, director of trading at Monex USA in Washington. "This evidence is clearly showing that there is an economic slowdown in the United States."
Softer-than-expected consumer and producer price inflation data this week has already tempered expectations that the Fed will raise rates at its September 15-16 meeting. Traders are now pricing in just a 31% probability of a September hike, alongside a 69% chance of a rate increase by December.
#sales #clearly
NEW YORK, Aug 14 (Reuters) - The dollar fell on Friday after data showed U.S. retail sales unexpectedly declined in July, helping send the euro and sterling to multi-month highs, as traders weighed Federal Reserve policy.
Retail sales dropped 0.6% last month after an unrevised 0.2% gain in June. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, edging up 0.1%.
"We are clearly having signs of poor consumption," said Juan Perez, director of trading at Monex USA in Washington. "This evidence is clearly showing that there is an economic slowdown in the United States."
Softer-than-expected consumer and producer price inflation data this week has already tempered expectations that the Fed will raise rates at its September 15-16 meeting. Traders are now pricing in just a 31% probability of a September hike, alongside a 69% chance of a rate increase by December.
#sales #clearly
3 months ago
By Karen Brettell
NEW YORK, Aug 13 (Reuters) - The U.S. dollar was mixed on Thursday after data showed that producer prices were unchanged in July, leading traders to further pare bets on a September Federal Reserve interest rate hike.
The flat reading in the Producer Price Index for final demand last month followed a revised 0.1% drop in June. Economists polled by Reuters had forecast the PPI rebounding 0.2%.
It comes after Wednesday's consumer price inflation report showed that U.S. consumer prices barely increased last month.
Noel Dixon, senior macro strategist at State Street, said the components of Thursday's report that feed into the personal consumption expenditures data due later this month suggest that the report "should be pretty good."
#month #report #reuters #data
NEW YORK, Aug 13 (Reuters) - The U.S. dollar was mixed on Thursday after data showed that producer prices were unchanged in July, leading traders to further pare bets on a September Federal Reserve interest rate hike.
The flat reading in the Producer Price Index for final demand last month followed a revised 0.1% drop in June. Economists polled by Reuters had forecast the PPI rebounding 0.2%.
It comes after Wednesday's consumer price inflation report showed that U.S. consumer prices barely increased last month.
Noel Dixon, senior macro strategist at State Street, said the components of Thursday's report that feed into the personal consumption expenditures data due later this month suggest that the report "should be pretty good."
#month #report #reuters #data
3 months ago
By Karen Brettell
NEW YORK, Aug 10 (Reuters) - The U.S. dollar gained on Monday as oil prices increased ahead of Wednesday's closely watched consumer price inflation report for July, after a much weaker-than-expected jobs report on Friday cast doubt on the likelihood of a near-term Federal Reserve rate hike.
Fed funds futures traders are now pricing in 52% odds of a hike at the Fed's September meeting, down from 67% a week ago. **** ysts say slowing job growth and easing oil prices have both contributed to the lower odds of a near-term hike.
"September was starting to look highly likely and then not only did we get a bad jobs report, but terrible revisions as well," said Adam **** on, chief currency **** yst at investingLive.
Wednesday's consumer price index data could spark another shift in expectations if it points to a reacceleration in price pressures. Producer price data on Thursday and retail sales figures on Friday will offer further clues on the path of inflation.
#Jobs
NEW YORK, Aug 10 (Reuters) - The U.S. dollar gained on Monday as oil prices increased ahead of Wednesday's closely watched consumer price inflation report for July, after a much weaker-than-expected jobs report on Friday cast doubt on the likelihood of a near-term Federal Reserve rate hike.
Fed funds futures traders are now pricing in 52% odds of a hike at the Fed's September meeting, down from 67% a week ago. **** ysts say slowing job growth and easing oil prices have both contributed to the lower odds of a near-term hike.
"September was starting to look highly likely and then not only did we get a bad jobs report, but terrible revisions as well," said Adam **** on, chief currency **** yst at investingLive.
Wednesday's consumer price index data could spark another shift in expectations if it points to a reacceleration in price pressures. Producer price data on Thursday and retail sales figures on Friday will offer further clues on the path of inflation.
#Jobs
3 months ago
(In Aug 7 story, corrects company name in paragraph 13)
By Karen Brettell
Aug 7 (Reuters) - Federal Reserve Chairman Kevin Warsh wants the bond market to take the wheel, contending it should do more of the work of setting the price of money in America.
In the seven weeks since his debut policy meeting as chairman, the result has been a volatile, expensive test of a long dormant economic argument: at what point does information from the central bank become too much information for monetary policy to work efficiently? And how will investors react to economic data and other developments with less guidance from the Fed than they have become accustomed to in recent years?
The latest response to this question will come on Friday morning with the release of the July employment report, a key read on an economy that many investors believe is already running hot.
#chairman #economic
By Karen Brettell
Aug 7 (Reuters) - Federal Reserve Chairman Kevin Warsh wants the bond market to take the wheel, contending it should do more of the work of setting the price of money in America.
In the seven weeks since his debut policy meeting as chairman, the result has been a volatile, expensive test of a long dormant economic argument: at what point does information from the central bank become too much information for monetary policy to work efficiently? And how will investors react to economic data and other developments with less guidance from the Fed than they have become accustomed to in recent years?
The latest response to this question will come on Friday morning with the release of the July employment report, a key read on an economy that many investors believe is already running hot.
#chairman #economic
3 months ago
By Karen Brettell
July 30 (Reuters) - U.S. stocks gained on Thursday as Microsoft's forecast-beating results eased investor worries about massive AI spending by companies, while 30-year Treasury yields scaled a 19-year peak after the Federal Reserve left interest rates unchanged on Wednesday, stoking concerns about longer-term inflation.
The ***** anese yen also gained sharply, prompting speculation that ***** anese officials intervened to shore up the beleaguered currency.
Microsoft rose 17% after the company forecast current-quarter sales and cloud growth that beat expectations, issued a capital expenditure outlook below Wall Street estimates, and said it expects to keep generating cash through the just-started fiscal 2027.
Investors have been rattled by rising AI costs at big technology firms even as they report strong earnings. Negative cash-flow reports from Alphabet and Tesla last week sparked a bout of selling in AI-linked stocks, with chip stocks also under pressure as investors questioned high valuations.
#japanese #forecast #karen
July 30 (Reuters) - U.S. stocks gained on Thursday as Microsoft's forecast-beating results eased investor worries about massive AI spending by companies, while 30-year Treasury yields scaled a 19-year peak after the Federal Reserve left interest rates unchanged on Wednesday, stoking concerns about longer-term inflation.
The ***** anese yen also gained sharply, prompting speculation that ***** anese officials intervened to shore up the beleaguered currency.
Microsoft rose 17% after the company forecast current-quarter sales and cloud growth that beat expectations, issued a capital expenditure outlook below Wall Street estimates, and said it expects to keep generating cash through the just-started fiscal 2027.
Investors have been rattled by rising AI costs at big technology firms even as they report strong earnings. Negative cash-flow reports from Alphabet and Tesla last week sparked a bout of selling in AI-linked stocks, with chip stocks also under pressure as investors questioned high valuations.
#japanese #forecast #karen
3 months ago
By Karen Brettell and Sruthi Shankar
July 28 (Reuters) - U.S. stocks were mixed on Tuesday ahead of key corporate earnings releases and the Federal Reserve's highly anticipated interest rate decision on Wednesday.
World stocks had earlier fallen to a one-month low as investors dumped chipmakers on concerns about Chinese competition and the funding of the AI boom, but pared the drop during New York trading hours.
Gains in Boeing and Coca-Cola helped offset tumbling chip stocks ahead of quarterly reports from Apple and other tech companies this week, though the tech-heavy Nasdaq Composite ended lower on the day.
"What has been behind the move into these non-tech names? Part of it is value," said Ross Mayfield, investment strategy ****** yst at Baird in Louisville, Kentucky. "GDP is solid, the labor market continues to churn along and, in a lot of places, there's evidence that consumer spending is reaccelerating."
#Tech #sruthi
July 28 (Reuters) - U.S. stocks were mixed on Tuesday ahead of key corporate earnings releases and the Federal Reserve's highly anticipated interest rate decision on Wednesday.
World stocks had earlier fallen to a one-month low as investors dumped chipmakers on concerns about Chinese competition and the funding of the AI boom, but pared the drop during New York trading hours.
Gains in Boeing and Coca-Cola helped offset tumbling chip stocks ahead of quarterly reports from Apple and other tech companies this week, though the tech-heavy Nasdaq Composite ended lower on the day.
"What has been behind the move into these non-tech names? Part of it is value," said Ross Mayfield, investment strategy ****** yst at Baird in Louisville, Kentucky. "GDP is solid, the labor market continues to churn along and, in a lot of places, there's evidence that consumer spending is reaccelerating."
#Tech #sruthi
3 months ago
By Karen Brettell and Sruthi Shankar
July 28 (Reuters) - U.S. stocks rebounded from earlier lows on Tuesday ahead of key corporate earnings releases and the Federal Reserve's highly anticipated interest rate decision on Wednesday.
World stocks had earlier fallen to a one-month low as investors dumped chipmakers on concerns about Chinese competition and the funding of the AI boom.
But gains in other sectors offset a decline in chip stocks in the U.S. session.
The Dow Jones Industrial Average rose 1.29% to 52,881.21, the S&P 500 rose 0.37% to 7,440.40 and the Nasdaq Composite rose 0.04% to 24,940.99.
#earlier #brettell #sruthi
July 28 (Reuters) - U.S. stocks rebounded from earlier lows on Tuesday ahead of key corporate earnings releases and the Federal Reserve's highly anticipated interest rate decision on Wednesday.
World stocks had earlier fallen to a one-month low as investors dumped chipmakers on concerns about Chinese competition and the funding of the AI boom.
But gains in other sectors offset a decline in chip stocks in the U.S. session.
The Dow Jones Industrial Average rose 1.29% to 52,881.21, the S&P 500 rose 0.37% to 7,440.40 and the Nasdaq Composite rose 0.04% to 24,940.99.
#earlier #brettell #sruthi
4 months ago
By Karen Brettell and Harry Robertson
NEW YORK/LONDON, July 2 (Reuters) - The dollar fell sharply on Thursday after the closely watched June employment report showed U.S. employers added far fewer jobs than expected, while the ****** anese yen surged as traders braced for possible intervention by ****** anese authorities.
Employers added 57,000 jobs, below economists' expectations for 110,000 job gains. Unemployment dropped to 4.2%, from 4.3%.
Markets quickly repriced their expectations for Federal Reserve policy. Fed funds futures traders now see a 54% chance of a rate hike by September, down from 67% before the report.
"It is weaker than expected, but the bulk of the numbers were in leisure and hospitality. That's probably driven more by seasonal factors than by anything else, so it's not very nefarious," Sarah Ying, head of FX strategy at CIBC Capital Markets, said.
NEW YORK/LONDON, July 2 (Reuters) - The dollar fell sharply on Thursday after the closely watched June employment report showed U.S. employers added far fewer jobs than expected, while the ****** anese yen surged as traders braced for possible intervention by ****** anese authorities.
Employers added 57,000 jobs, below economists' expectations for 110,000 job gains. Unemployment dropped to 4.2%, from 4.3%.
Markets quickly repriced their expectations for Federal Reserve policy. Fed funds futures traders now see a 54% chance of a rate hike by September, down from 67% before the report.
"It is weaker than expected, but the bulk of the numbers were in leisure and hospitality. That's probably driven more by seasonal factors than by anything else, so it's not very nefarious," Sarah Ying, head of FX strategy at CIBC Capital Markets, said.
5 months ago
By Karen Brettell
June 3 (Reuters) - The artificial-intelligence boom already has fueled a record stock-market surge. Now it's driving up long-term Treasury yields too.
Meta Platforms, Oracle and other technology companies have raised $250 billion in debt markets globally this year, according to Morgan Stanley, borrowing at a scale that would have been hard to imagine only a few years ago.
The recent surge in AI-related infrastructure investment is partly behind the May rout that pushed 30-year Treasury yields to their highest level since 2007, **** ysts say, alongside inflation fears and shifting expectations for Federal Reserve policy. Treasury yields have come down from their May highs but remain above the levels where they began the year, reflecting in part the wave of bond issuance.
"We're talking $750 billion, $850 billion of capex spending on an annualized basis, and it's expected to ramp up to close to a trillion next year," said Thomas Urano of Sage Advisory in Austin. "It's kind of like thinking about a federal stimulus package or some kind of infrastructure spend at a federal level."
June 3 (Reuters) - The artificial-intelligence boom already has fueled a record stock-market surge. Now it's driving up long-term Treasury yields too.
Meta Platforms, Oracle and other technology companies have raised $250 billion in debt markets globally this year, according to Morgan Stanley, borrowing at a scale that would have been hard to imagine only a few years ago.
The recent surge in AI-related infrastructure investment is partly behind the May rout that pushed 30-year Treasury yields to their highest level since 2007, **** ysts say, alongside inflation fears and shifting expectations for Federal Reserve policy. Treasury yields have come down from their May highs but remain above the levels where they began the year, reflecting in part the wave of bond issuance.
"We're talking $750 billion, $850 billion of capex spending on an annualized basis, and it's expected to ramp up to close to a trillion next year," said Thomas Urano of Sage Advisory in Austin. "It's kind of like thinking about a federal stimulus package or some kind of infrastructure spend at a federal level."
