Investors want a bigger reward for lending money
Data: Federal Reserve Bank of St. Treasury Department; Chart: Courtenay Brown/AxiosThe relentless run-up in Treasury yields reflects the globe's new economic reality: It takes a much richer reward to persuade investors to lend their money, especially for the longer run.Why it matters: Unlike previous bond sell-offs driven by inflation fears, this one reflects a world in which governments and companies are scrambling for enormous amounts of capital to finance wide fiscal deficits, the AI infrastructure buildout and more.The competition is forcing borrowers to pay more.The good news is that inflation expectations appear to be in check, so the moves don't necessarily compel any immediate reaction from the Federal Reserve.
Reported by 1 outlet — Axios. See all sources ↓
Data: Federal Reserve Bank of St. Treasury Department; Chart: Courtenay Brown/AxiosThe relentless run-up in Treasury yields reflects the globe's new economic reality: It takes a much richer reward to persuade investors to lend their money, especially for the longer run.Why it matters: Unlike previous bond sell-offs driven by inflation fears, this one reflects a world in which governments and companies are scrambling for enormous amounts of capital to finance wide fiscal deficits, the AI infrastructure buildout and more.The competition is forcing borrowers to pay more.The good news is that inflation expectations appear to be in check, so the moves don't necessarily compel any immediate reaction from the Federal Reserve. But it does imply that policy rates will need to remain higher, year in and year out, to keep the economy in balance.It also makes Washington's fiscal math considerably more painful by raising the cost of financing an already swelling national debt. For homebuyers, that means mortgage rates are less likely to fall anytime soon.By the numbers: The bond market's long-run inflation pricing has barely changed even as Treasury yields have climbed.The 10-year breakeven inflation rate — a market-based gauge of expected inflation — has edged higher to 2.28% since late June as conflict in the Middle East flared again.
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- What's the story?
- Data: Federal Reserve Bank of St. Treasury Department; Chart: Courtenay Brown/AxiosThe relentless run-up in Treasury yields reflects the globe's new economic reality: It takes a much richer reward to persuade investors to lend their money, especially for the longer run.Why it matters: Unlike previous bond sell-offs driven by inflation fears, this one reflects a world in which governments and companies are scrambling for enormous amounts of capital to finance wide fiscal deficits, the AI infrastructure buildout and more.The competition is forcing borrowers to pay more.The good news is that inflation expectations appear to be in check, so the moves don't necessarily compel any immediate reaction from the Federal Reserve.
- How widely is it covered?
- 1 outlet, average source rating 7.0/10.
- When was it last updated?
- 12m ago.
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Investors want a bigger reward for lending money
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