Long-term borrowing costs in the United States have risen again, despite a government announcement that it would intervene to try to bring them down.
Yields on longer-dated government bonds, which influence mortgage rates and corporate borrowing, moved higher after briefly easing following the announcement.
The short-lived relief suggested that investors remained concerned about the scale of government borrowing and the outlook for inflation. Some traders also pointed to uncertainty about the timing and scale of any further intervention.
Higher long-term rates can feed through to households and businesses, making home loans, car finance and new investment more expensive.
“Markets are telling policymakers that announcements alone are not enough to change the fundamentals.”
“Markets are telling policymakers that announcements alone are not enough to change the fundamentals,” said one senior fixed-income strategist.
Analysts say decisions by the Federal Reserve, alongside budget choices in Washington, will be key to where borrowing costs go next.
Some economists argue that sustained high yields could weigh on economic growth if they persist for an extended period. Others note that higher yields also increase the cost of servicing the national debt itself.
Mortgage rates, which tend to track longer-term government bond yields, have remained elevated, putting pressure on prospective homebuyers. Estate agents say affordability remains one of the biggest challenges facing the housing market.
Global investors closely watch US government debt, which serves as a benchmark for financial markets around the world.
Officials are expected to face continued questions over what further steps, if any, they might take to steady the bond market.
