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Beset by a selloff in Treasuries that’s sent benchmark yields to multidecade highs, the US government is finding itself increasingly dependent on investors who only buy if the price is right.
The US benchmark yield climbed to the highest since 2002 with persistent inflation, massive government borrowing and strong economic growth keeping interest-rate expectations elevated.
Yields on the US Treasury’s longest-dated bond rose for a sixth straight day, on the verge of crossing another key threshold amid a deepening selloff across global debt markets.
Prospect Capital Corp. is discussing a yield of about 8% on its first junk-bond offering since 2021, underscoring the rising costs of funding for private-credit funds.
Government borrowing costs have been climbing around the world as investors demand more compensation to entice them to hold longer-maturity debt. The rise in US bond yields even prompted Treasury Secretary Scott Bessent to announce expanded buybacks of long-dated government debt — an intervention that failed to stop yields on 10-year Treasuries from surpassing 5% and hitting their highest point in almost two decades.
Bonds steadied after a selloff that drove global yields to the highest in decades as the oil rally lost steam. The 10-year Treasury yield slipped three basis points to 5.17%, paring a two-day surge of more than 20 basis points. Bloomberg's Alice Gledhill reports. (Source: Bloomberg)
The surge that sent US Treasury yields to the highest in decades is threatening carry trades that had become the go-to strategy for emerging-market investors this year.
A painful fixed-income selloff is eroding returns in state and local government debt, driving the rate on benchmark 30-year municipal bonds above the 5% threshold.