NEW DELHI: For the first time in nearly 16 years, the yield on 10-year US government bonds have risen above 5 per cent.
It was back in 2007 during the height of the subprime mortgage crisis when the yield had breached the 5% mark.
The rate on 10-year Treasury bonds hit 5.008 percent in morning.
This comes amid investor worries that the US Federal Reserve will keep interest rates higher for longer in the face of stubborn inflation and a resilient US economy.
Fed Chair Jerome Powell had suggested last week that central bankers are inclined to hold rates steady at their November meeting, but remain open to hiking again if a resilient economy fans inflation risks.
Another emerging threat to Treasuries is the changing composition of the market.
The Fed is reducing its bond holdings via quantitative tightening, while the holdings of foreign governments such as China’s are waning. In their place, hedge funds, mutual funds, insurers and pensions have stepped in, Bloomberg reported.
The Treasury market remains on course for an unprecedented third year of annual losses.
Elevated borrowing expenses could potentially act as a restraining factor on the US economy, which might aid the Federal Reserve in its battle against inflation.
Over the past few weeks, the average rate for a 30-year fixed mortgage has surged to approximately 8%, and the expenses associated with servicing credit card balances, student loans, and other debts have also increased in response to rising market interest rates.
(With inputs from agencies)
It was back in 2007 during the height of the subprime mortgage crisis when the yield had breached the 5% mark.
The rate on 10-year Treasury bonds hit 5.008 percent in morning.
This comes amid investor worries that the US Federal Reserve will keep interest rates higher for longer in the face of stubborn inflation and a resilient US economy.
Fed Chair Jerome Powell had suggested last week that central bankers are inclined to hold rates steady at their November meeting, but remain open to hiking again if a resilient economy fans inflation risks.
Another emerging threat to Treasuries is the changing composition of the market.
The Fed is reducing its bond holdings via quantitative tightening, while the holdings of foreign governments such as China’s are waning. In their place, hedge funds, mutual funds, insurers and pensions have stepped in, Bloomberg reported.
The Treasury market remains on course for an unprecedented third year of annual losses.
Elevated borrowing expenses could potentially act as a restraining factor on the US economy, which might aid the Federal Reserve in its battle against inflation.
Over the past few weeks, the average rate for a 30-year fixed mortgage has surged to approximately 8%, and the expenses associated with servicing credit card balances, student loans, and other debts have also increased in response to rising market interest rates.
(With inputs from agencies)