US 10-Year Breaches 5% as Inflation, Supply Worries Mount

zug_zug•about 1 hour ago

Correct me if I'm wrong but isn't there an inherent vicious cycle in that if the price gets too high our ability to pay it off becomes uncertain, at which point the premium for the risk would shoot up dramatically (and so on)?

nostrademons•about 1 hour ago

That's correct. The root cause is that the government is making promises it can't keep, which make those promises worthless. The correction is usually that that government falls, and a new government starts making smaller, more achievable promises that restores trust in it.

cyanydeez•13 minutes ago

Unfortunately, divestment of the US dollar is like lighting a match in a house looking for the gas leak.

howeyc•37 minutes ago

Nope. Government debt has existed for a long time in the US. There is no plan to pay it off ever. Headlines will scream that the debt is too high for a long time to come.

Government debt yields on the short end are set by the Fed. Long yields are "set by the market" based on inflation fears, and mostly guessing what the Fed will set rates to over the next 10+ years.

Japan had way higher Debt-to-GDP for decades, yet the long term yields were low. Why? The central bank said "we anticipate yields to be set low for a long time" and did so for a long time. Recently they said they are going to "respond to inflation" like all other central banks and suprise, surprise the long end is creeping up. "Bond vigilantes" came into existence as soon as the central bank changed their policy.

mono442•25 minutes ago

The US government only borrows in the us dollars. It's not possible that they won't be able to pay it off.

The yield increase is basically the market pricing in the interest rate increases since they're expected now.

toomuchtodo•about 2 hours ago

https://archive.today/xgNhC

mindslight•about 2 hours ago

Did anybody think Grumpism was going to go somewhere other than here? It's merely been the spite choice the whole time - a way for economic losers to stick their thumbs in the eyes of people who had been mildly successful. Pure crab bucket mentality, now with $40T more in the hole - and still no actual solutions to the problems we are facing. But that certainly doesn't stop those problems from being brought up to rally support for the next con job. And the people at the top certainly aren't suffering! We have basically squandered the advantages our grandparents sacrificed for, to satisfy some kind of collective ego based around American exceptionalism and ignorant fundamentalism.

(edit: I guess a lot of people still aren't ready to hear it)

rayiner•about 1 hour ago

Obama sped up the rate of growth of the debt around 2010 and the percentage growth annually has been consistent since then (i.e. linear on the log scale): https://usafacts.org/answers/how-much-debt-does-the-us-have/.... Not even counting the jumps in response to the 2008 recession and COVID.

BoiledCabbage•23 minutes ago

Is this serious?

It's because the country went through the great recession and was attempting to pull out and avoid financial collapse.

Look at Revenue per year as a % of GDP and look at Expenses per year as a % of GDP. It's pretty clear.

Expenses went up avoiding a depression which was done successfully, and revenue dropped due to the falling economy. The president was handed a collapsing economy and saved it.

The issue is the other party that keeps getting handed great economies since the late 90s and fails to do anything but make the problem worse.

caycep•20 minutes ago

https://fred.stlouisfed.org/series/gfdegdq188s

Debt per GDP/size of US economy is more useful. Debt/GDP has the 2008 jump as the Obama Admin tried to (but not nearly enough) stimulate out of the housing crisis. Debt/GDP looks flat until 2020.

2008 and 2020 jumps make sense in the setting the 2008 crisis and COVID which was effectively a recession assuming you believe in Keynesian economics.

Paying for US debt if you are the US is cheap when interest rates low. Trump/Bessent/Elon have been doing everything they can to drive up inflation, so now interest rates are necessarily going higher...

Jtsummers•9 minutes ago

> Debt/GDP has the 2008 jump as the Obama Admin tried to

Remember that 2008 was still Bush, Obama didn't become president until 2009.

US 10-Year Breaches 5% as Inflation, Supply Worries Mount

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