The US government hasn't paid this much to borrow long-term since the eve of the 2008 financial crisis
For the first time since the eve of the global financial crisis, the US government is paying 5 percent to borrow money for 30 years.
CNBC reported that the US Treasury department sold US$25bn of new 30-year bonds on Wednesday at a high yield of 5.046 percent, slightly above the level seen in trading immediately before the auction and reflecting middling demand.
US sales of three- and 10-year Treasuries earlier in the week had also drawn lower demand than expected.
The auction landed hours after official US Bureau of Labor Statistics data showed the US producer price index rose 6 percent year-on-year in April — its highest reading since December 2022 and well above the 0.5 percent monthly consensus forecast from Dow Jones.
April's US PPI was up from 4.3 percent year-on-year in March and 3.4 percent before the Iran war began in February, the Financial Times reported.
US core producer inflation, stripping out food, energy, and trade services, rose to 4.4 percent in April from 3.7 percent in March.
US petrol prices have surged by more than half to US$4.51 a gallon, with diesel rising by a similar margin to US$5.66, close to record levels.
Concerns about sustained US price growth have pushed the 30-year yield up roughly 0.4 percentage points since the war began.
Bellwether Wealth president and CIO Clark Bellin told CNBC that US$100 oil is driving up production costs across the board.
Deutsche Bank's Brett Ryan told the Financial Times the effect is broad-based, noting that diesel-dependent trucking touches nearly every consumer purchase, and warned the summer ahead would not be easy for US consumers.
US consumer inflation has already risen to 3.8 percent annually in April, a three-year high and above the 3.7 percent forecast by Dow Jones economists, CNBC reported.
Both measures run well above the US Federal Reserve's 2 percent target.
The Financial Times reported US markets on Wednesday priced in an 80 percent chance of a rate rise by April 2027, up from 56 percent on Monday.
Boston Fed president Susan Collins said she could “envision a scenario” where the US central bank would need to raise rates, and that while tightening was not her “baseline,” it was now a possible outcome — though she does not hold a vote on the Federal Open Market Committee.
Collins also told the Wall Street Journal she expects war-driven US inflation pressures to eventually subside and that the current shock has masked evidence underlying US inflation is still headed down.
“Financing the US debt is getting much more expensive,” Ed Al-Hussainy, a portfolio manager at Columbia Threadneedle, told the Financial Times.
The figures arrive just days before Kevin Warsh, the 56-year-old financier tapped to lead the US Fed, is set to take the helm, the outlet noted.
Joseph Brusuelas at RSM told the Financial Times there was “pressure in the pipeline” and that “it’s going to be some time before US inflation peaks.”
