The outlook for US government debt

Economics 2018-04-12

Summary:

THE bond market used to be the prime exhibit for those predicting low long-term economic growth. In the summer of 2016 the ten-year Treasury yield briefly dipped below 1.5%, as expectations for growth and inflation sagged. Things have changed. Earlier this year the ten-year yield briefly went higher than 2.9%. Even after recent share-price gyrations, it remains around 2.8%, well up since the start of 2018. The rebounding interest rate partly reflects higher confidence in global growth. Inevitably, a new set of pessimists now voice a fresh worry: that bond yields might go on rising for less welcome reasons.

They point to three threats. The first is monetary policy. The Federal Reserve has raised short-term interest rates by 1.5 percentage points since December 2015. At their March meeting, rate-setters slightly upgraded forecasts of how far rates should eventually rise. Last October the Fed began shrinking its $4.5trn portfolio of assets, mostly government debt, amassed since the start of...Continue reading

Link:

https://www.economist.com/news/finance-and-economics/21740407-bond-market-doomsters-are-overstating-their-case-outlook-us-government?fsrc=rss

From feeds:

Test remix » Economics
Test hub » Economics

Tags:

Authors:

The Economist online

Added:

04/12/2018, 17:45

Published Date:

04/12/2018, 10:54