The US 10-year Treasury yield hit its highest level since 2007 on Tuesday, but bonds sold off even harder in France, Italy and the UK. Treasury Secretary Scott Bessent told reporters the moves reflect "global issues," as he faced a contentious congressional hearing over the economy.
The US 10-year Treasury yield climbed to 5.041% on Tuesday, its highest level since July 2007. Treasury Secretary Scott Bessent told reporters ahead of a House hearing that the rise was due to "global issues", offering no further explanation.
Government bonds sell off well beyond the US
The US move is only part of the story. Between August 25 and Tuesday, French 10-year yields rose 50.4 basis points to 4.553%, Italian yields climbed 47.0 basis points to 4.482%, and UK yields rose 44.8 basis points to 5.435% — each a bigger jump than the 42.2-basis-point rise in the US over the same span. German Bund yields, up 36.9 basis points, are at their highest since 2009, while Japan's 10-year yield, up 14.3 basis points to 3.036%, sits at a roughly 30-year high.
Bessent defends his record before Congress
Bessent's remarks came as he testified before the House Financial Services Committee, a hearing nominally focused on the IMF that Democrats used to press him on the economy. Rep. Maxine Waters accused him of failing to stop the Treasury sell-off. Bessent countered that Treasury's recent buybacks of long-dated bonds had kept yields lower than they otherwise would have been, pointing to two of the most successful bond auctions in 20 years. He said he is working on deficit-reduction plans that would ease pressure on the 10-year yield.
Oil and debt keep pressure on borrowing costs
Crude trading above $100 a barrel has raised the risk that energy costs feed back into inflation, while governments keep issuing large amounts of debt to cover deficits and spending. That combination has pushed up borrowing costs broadly. The 30-year fixed mortgage rate topped 7% last week. The national debt has passed $40 trillion, and US gas prices reached $4.32 a gallon on Monday, up $1.14 from a year earlier, according to AAA.
A gradual rise in yields can reflect stronger growth, but this three-week spike has left markets little time to adjust before central banks respond.
Sources: Investinglive, CNBC, Investing.com
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