USA borrows at high interest rates
The US is once again facing weak demand at bond auctions this week, pushing yields higher.
On Wednesday, the US Treasury’s seven-year, $44 billion bond auction was priced at 4,650 percent, above the market yield of 4,637 percent.
After the auction, the two-year bond yield, which is sensitive to the policy rate, came very close to the 5 percent level it last reached on May 1. The yield was set above the market in both bond auctions of the US Treasury on Tuesday.
This week’s bond issuances clearly reflected that the lack of sufficient improvement in inflation increased the uncertainty over monetary policy, leading to the US borrowing at higher interest rates. Stating that the current situation is a cause for concern, Miller Tabak + Co Strategist Matt Maley said, “Yields are not only rising again in the USA, but also in other parts of the world.
“This is not good news for the stock market, which is trading at 22 times earnings expectations,” he commented.