In today’s briefing:
- High Government Borrowing: Nuanced Implications for US Treasuries
High Government Borrowing: Nuanced Implications for US Treasuries
- The continuation of large budget deficits under the second Trump administration is causing concerns amongst investors about interest rate implications, but Treasury yields are determined by a multitude of factors.
- High government borrowing will typically impart greater stress on financial markets if private sector borrowing is also strong. Long-end yield curve steepening may reflect funding issues due to buyer shortages.
- Current expected returns on Treasuries (both nominal and real) are highly elevated compared to recent history and should offer decent protection for investors.
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