The 10-year Treasury yield hit a 19-month high Monday morning in a challenge to Treasury Secretary Scott Bessent's effort to ****** ert control over long-term government bond yields. Higher long-term bond yields are generally a negative for stock prices and mortgage rates, and place upward pressure on the surging cost of servicing the federal debt.
Treasury announced on Aug. 19 that it would at least double the size of buybacks of government bonds with durations of 10 years up to 30 years. The announcement stirred a brief easing of yields, with the 10-year yield slipping to 5 basis point to 4.65%. But the 10-year yield touched 4.76% on Monday, the highest since January 2025.
The 30-year Treasury yield, at 5.27%, hasn't yet eclipsed the 5.29% level ahead of Bessent's buyback news. That was the highest 30-year yield level since 2007.
The upward pressure on the 10-year Treasury yield has a number of contributors. A big one seems to be a surge in corporate debt issuance by AI hyperscalers like Google, Amazon and Microsoft. Those technology ****** ans are offering higher rates than Treasury, directing some buying power away from government debt and forcing yields higher. Persistent inflation is another factor and the resumption in U.S.-Iran strikes over the weekend won't help.
Then there's the federal budget deficit, which will come in around 6% of GDP this year, extraordinarily high for a period of solid economic growth. The rising burden of interest costs and the expense of Social Security and Medicare for baby boomers suggests that big deficits may be here to stay.
#yield
Treasury announced on Aug. 19 that it would at least double the size of buybacks of government bonds with durations of 10 years up to 30 years. The announcement stirred a brief easing of yields, with the 10-year yield slipping to 5 basis point to 4.65%. But the 10-year yield touched 4.76% on Monday, the highest since January 2025.
The 30-year Treasury yield, at 5.27%, hasn't yet eclipsed the 5.29% level ahead of Bessent's buyback news. That was the highest 30-year yield level since 2007.
The upward pressure on the 10-year Treasury yield has a number of contributors. A big one seems to be a surge in corporate debt issuance by AI hyperscalers like Google, Amazon and Microsoft. Those technology ****** ans are offering higher rates than Treasury, directing some buying power away from government debt and forcing yields higher. Persistent inflation is another factor and the resumption in U.S.-Iran strikes over the weekend won't help.
Then there's the federal budget deficit, which will come in around 6% of GDP this year, extraordinarily high for a period of solid economic growth. The rising burden of interest costs and the expense of Social Security and Medicare for baby boomers suggests that big deficits may be here to stay.
#yield
2 months ago
