"A long period of stability for the US government bond market showed signs of cracking this week as a lack of investor appetite for new debt sent the benchmark 10-year yield to its highest level since last June."
For the past year and a half economic analysts have warned that record sized debt sales by the US Treasury were going to impact yield rates, which had been holding steady over time, with a 10-year yield sitting comfortably below 4 per cent. This week, the yield on 10-year notes jumped from 3.65 per cent to 3.87 per cent, with no signs that the increasing rate will stop its rise.
"Falling inflation, rising unemployment, the housing market slump, the Federal Reserve’s policies of a near zero overnight borrowing rate and its purchase of up to $1,700bn in bonds have all helped keep Treasury yields near historic lows."
That little bn stands for BILLION, as in 1,700 BILLION dollars in bonds purchased by the Federal Reserve.
But this week the mood shifted as yields for $118bn of new US debt were much higher than forecast, sparking overall selling of Treasuries
Nothing to worry about. Just a touch of ice scattered across the deck. Everything is fine. Carry on with the music and dancing.