9 hrs ago
US Treasury Yields Top 5% Amid Global Bond Market Strain
US government borrowing costs rose sharply because investors were less willing to buy long-term government bonds.
The key 10-year Treasury yield moved above 5 percent.
Treasury Secretary Scott Bessent said worldwide problems were affecting the bond market, but he did not name a specific cause.
The Treasury bought up to $6 billion of older bonds to create more demand.
Bessent said yields might have risen even more without those purchases.
He also said reducing the government deficit could help lower yields.
Oil prices rose above $100 a barrel after conflict involving Iran disrupted energy supplies.
Higher bond yields, costly oil and falling stocks are making investors worry that markets could weaken further.
The 10-year US Treasury yield rose above 5%, reaching about 5.04%, its highest level since July 2007.
Treasury Secretary Scott Bessent attributed high yields to broader “global issues” and said deficit reduction could ease pressure.
The Treasury conducted a buyback of up to $6 billion in older, less-liquid bonds maturing in 10 to 30 years.
Brent crude exceeded $100 per barrel as conflict involving Iran disrupted global energy supplies, while 30-year mortgage rates surpassed 7%.
US stocks fell as analysts warned that the combination of high yields, expensive oil and weaker equities could pressure asset valuations.
- Who
- US Treasury Secretary Scott Bessent, the US Treasury Department, Wall Street analysts and US investors.
- What
- The 10-year US Treasury yield crossed 5% amid a bond sell-off, while the Treasury carried out a large bond buyback.
- Where
- In the US Treasury and financial markets, with global effects cited by Bessent.
- When
- On Tuesday; the article does not provide a specific date.
- Why
- The article cites broader global issues, concerns about the US deficit, disrupted energy supplies linked to conflict involving Iran and reduced demand for long-term US government debt.
Treasury Defense
Market Concerns
Effect of the bond buyback
Treasury Defense
Scott Bessent argued that Treasury yields would have climbed further without purchases of long-dated bonds and pointed to two highly successful Treasury auctions.
Market Concerns
Wall Street analysts focused on a declining cover ratio for long-dated bond purchases, suggesting concerns about demand for those securities.
Condition of investor confidence
Treasury Defense
Bessent emphasized the broader health of regular government debt auctions as evidence that international investor confidence was not broken.
Market Concerns
Analysts highlighted the yield spike, falling stocks, elevated oil prices and the potential for a broader market drawdown.
Main remedy for high yields
Treasury Defense
Bessent said plans to reduce the US deficit could help ease pressure on the 10-year yield.
Market Concerns
The article presents global issues, energy-supply disruption and weaker demand for long-term debt as additional forces affecting yields.
Key facts
- 10-year Treasury yield
- About 5.04%, the highest level since July 2007.
- Treasury buyback
- Up to $6 billion in older, less-liquid bonds maturing in 10 to 30 years.
- Oil price
- Brent crude rose above $100 per barrel.
- Mortgage rate
- The average 30-year fixed mortgage rate exceeded 7% the previous week.
- Treasury explanation
- Scott Bessent cited broader global issues and said deficit reduction could ease yields.
- Stock market reaction
- The Dow fell more than 500 points around midday; the S&P 500 fell 0.45% and the Nasdaq Composite fell 0.73%.
- Analyst warning
- Wells Fargo cited possible stock-market weakness and flagged a 5% to 10% drawdown risk this year.
Quotes
Scott Bessent
US Treasury Secretary who defended the Treasury’s purchase of long-dated bonds
“And then we proceeded to have two of the most successful Treasury bond auctions that we've had in 20 years.”
wionews.com
“I believe that the 10-year yield reflects many things, but the need to address the deficit is one of those”
wionews.com
Sources
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