As Bessent addresses G20 peers, analysts warn benchmark bond yields near ‘concern zone’
With US 10-year Treasury yield at a 20-month high, alarm bells expected to ring if it crosses 5 per cent tipping point
US Treasury Secretary Scott Bessent told G20 finance ministers and central bankers this week that the United States was a leader in addressing sovereign debt issues in emerging markets and low-income countries, but analysts said he was also grappling with serious debt issues closer to home.
With the US 10-year Treasury yield rising to a 20-month high of 4.78 per cent, Tuesday’s discussion in Asheville, North Carolina, landed amid a global sell-off of rich countries’ sovereign debt that has also sent benchmark bond yields in Japan and the United Kingdom to levels unseen in decades.
Analysts warned that the rise in yields was approaching worrying territory for the global economy as higher borrowing costs worked their way through to governments, companies and households and reduced the amount investors were willing to pay for stocks.
“We’re heading into the concern zone, which is the other side of 5 per cent for the 10-year Treasury … where alarm bells would begin to ring,” said Padhraic Garvey, regional head of research for the Americas at ING.