Fiscal concerns and doubts on Fed independence send US yields to long-term highs
US Treasury yields keep rising across the curve this week, with the yield for the 30-year Treasury bond reaching its highest level since 2007, during the global financial crisis, at 5.33% so far on Monday.
US Treasury yields have surged to their highest levels in over a decade, driven by concerns over a growing fiscal deficit and doubts about the Federal Reserve's independence. The 30-year Treasury bond yield hit 5.33%, the highest since the 2007 financial crisis, while the 10-year yield reached its highest level since 2007, at 4.7%.
Shorter-term yields have also increased, with the 2-year yield trading near six-month highs above 4.3%. The budget deficit grew to $432 billion in July, a 48% increase compared to July last year. Doubts have arisen about the Federal Reserve's commitment to combating inflation, with some questioning the central bank's independence.
This growing uncertainty is putting pressure on US government bonds. Similar trends are observed in other major economies, with long-term yields rising across the globe. Central banks, tasked with maintaining price stability and controlling inflation around 2%, face challenges in implementing policy given the high levels of public debt.
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