What's Behind the Big Surge in US Government Bond Yields
Global bond yields are at their highest level since 2008, with the 30-year US Treasury touching 5% just before Treasury Secretary Scott Bessent announced a surprise increase of his department's bond buyback program and Fed Chairman Kevin Warsh made his hawkish speech at Jackson Hole. So what's driving yields higher? And what options do policymakers have to bring them down? In this episode we…
Global bond yields have reached their highest level since 2008, with the 30-year US Treasury bond hitting 5% just before Treasury Secretary Scott Bessent announced an unexpected increase in his department's bond buyback program and Federal Reserve Chairman Kevin Warsh delivering a hawkish speech at the Jackson Hole symposium. The rising yields have left many wondering what is driving this significant increase and what options policymakers have to bring them back down.
To shed light on the situation, the author spoke with Stanford Professor Darrell Duffie, who has been researching bonds for years and even presented a paper at the 2023 Jackson Hole symposium about potential solutions to fix the US Treasury market. However, the bond market landscape has changed significantly since Duffie's paper was published.
Recently, at the 2023 Jackson Hole symposium, the author had the opportunity to catch up with Duffie and discuss the current state of the bond market, as well as the challenge of reducing the Federal Reserve's balance sheet.
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