{"id":6405,"date":"2026-05-15T19:35:58","date_gmt":"2026-05-15T19:35:58","guid":{"rendered":"https:\/\/stock999.top\/?p=6405"},"modified":"2026-05-15T19:35:58","modified_gmt":"2026-05-15T19:35:58","slug":"u-s-debt-demand-weakens-as-one-shock-after-another-stokes-fear-that-high-inflation-is-here-to-stay","status":"publish","type":"post","link":"https:\/\/stock999.top\/?p=6405","title":{"rendered":"U.S. debt demand weakens as one shock after another stokes fear that high inflation is here to stay"},"content":{"rendered":"

<\/p>\n

Bonds sold off sharply around the world on Friday as investors brace for persistently elevated inflation amid the ongoing energy crisis. <\/p>\n

Oil jumped after the U.S.-China summit wrapped up without any signs that Beijing will lean on ally Iran to reopen the Strait of Hormuz.<\/p>\n

That followed a series of U.S. debt auctions this past week that signaled tepid demand for longer-term Treasuries as fresh consumer and producer inflation data came in hotter than expected.<\/p>\n

On Wednesday, the Treasury Department sold $25 billion of 30-year bonds at a 5% yield for the first time since 2007. \u00a0Before then, no 30-year Treasury carried an interest rate above 4.75%.<\/p>\n

It was a stark contrast from mid-February\u2014just before the U.S.-Israeli war on Iran started\u2014when a Treasury offering saw the highest demand ever in the history of 30-year auctions.<\/p>\n

In addition to the latest auction of so-called long bonds, sales of three- and 10-year Treasuries earlier in the week also drew less demand than expected.<\/p>\n

Skittishness among bond investors is becoming a trend. In March, auctions for two-, five- and seven-year Treasury notes all saw weak demand, forcing yields to go higher than expected.<\/p>\n

Higher yields boost interest costs, which are running at $1 trillion a year, worsening the budget deficit and adding even more to the total debt burden.<\/p>\n

The deficit is already on a troubling path this year. Last week, the Treasury Department announced it expects to borrow more than anticipated this quarter as incoming cash flow has been softer than initially projected.<\/p>\n

Meanwhile, the federal government has to issue trillions of dollars of fresh debt each year to cover the deficit, and must offer a yield that\u2019s attractive enough to investors who see inflation eroding fixed income. <\/p>\n

Previous supply shocks were seen as one-off events that would produce temporary price surges. But there\u2019s been a steady tempo of repeated shocks in recent years, including COVID supply-chain chaos, Russia\u2019s invasion of Ukraine, President Donald Trump\u2019s tariffs, and the now the Iran war.<\/p>\n

That\u2019s kept inflation stubbornly high, making Federal Reserve policymakers less inclined to remain on course for future rate cuts by \u201clooking through\u201d short-term price spikes.<\/p>\n

\u201cMore than five years of above-target inflation has reduced my patience for \u2018looking through\u2019 another supply shock,\u201d Boston Fed President Susan Collins said Wednesday. \u201cAnd while it is not my most likely outlook, I could envision a scenario in which some policy tightening is needed to ensure that inflation returns durably to 2% in a timely manner.\u201d<\/p>\n

The comments echoed what Fed Governor Chris Waller said last month, when he delivered a speech titled \u00a0\u201cOne Transitory Shock After Another.\u201d<\/p>\n

He said he learned from the Fed\u2019s prior mistake to treat the 2021-2022 inflation spike as transitory and will be cautious during a series of shocks.<\/p>\n

\u201cWhile intellectually it makes sense to look through each shock, with a sequence of shocks, policymakers need to be more vigilant,\u201d Waller explained. \u201cThis is because if the shocks hit one after another, they will keep inflation elevated for quite some time. The standard \u2018look through\u2019 can become problematic if businesses and households start to believe inflation is persistently high and it affects their price- and wage-setting behavior.\u201d<\/p>\n

For his part, Treasury Secretary Scott Bessent insisted that the current energy shock will just be a momentary blip, though he admitted that it could take six to nine months for U.S. oil prices to come back down.<\/p>\n

He predicted oil producers will eventually unleash a flood of supply, noting U.S. output is at record highs and the United Arab Emirates\u2019 exit from OPEC means it won\u2019t be limited by the cartel, while other Persian Gulf countries will \u201cpump like crazy.\u201d<\/p>\n

\u201cI firmly believe that nothing is more transient than a supply shock and we can we can look through that,\u201d Bessent told CNBC on Thursday.<\/p>\n

But bond investors disagree, with U.S., German, Japanese, and U.K. yields all soaring on Friday\u2014and sending stocks tumbling as the risk of higher interest rates deflated this week\u2019s earlier euphoria.<\/p>\n

Until traffic through the Strait of Hormuz returns to normal, yields could keep rising if central bankers don\u2019t demonstrate more resolve to rein in inflation.<\/p>\n

\u201cLong-end rates are now in control of monetary policy,\u201d Peter Boockvar, chief investment officer of One Point BFG Wealth Partners, wrote in a note Friday. <\/p>\n

#U.S #debt #demand #weakens #shock #stokes #fear #high #inflation #stay<\/p>\n","protected":false},"excerpt":{"rendered":"

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