The US bond market is booming due to record government debt. What the media is writing

The US borrowing market remains tense after a sharp jump in government bond yields. The administration of US President Donald Trump increased the loan repayment program, but this did not have the expected effect, after which Treasury Secretary Scott Bessant promised to take new measures. Against this background, the dollar continues to fall. How the world's media reacts to financial instability is in the Izvestia digest.

The Washington Post: What's behind the Roller Coaster ride in the Bond market

On August 20, the bond market ignored an unusual attempt by U.S. Treasury Secretary Scott Bessant to prevent government borrowing costs from rising. At the beginning of trading, the yield on 30-year bonds rose to 5.27%, and then fell to 5.24%, offsetting more than half of the drop in value that occurred after the intervention of the Issuer in the market. Earlier, he said that the Ministry of Finance would at least double the planned volume of repurchases of long-term treasury bonds to $4 billion dollars or more, which would quickly reduce yields and ease pressure on borrowing costs for governments, businesses and consumers.

$32 trillion of the national debt is in the hands of investors and the public in the form of treasury bonds. Rising yields mean that investors are demanding a greater return on their investments, and that borrowing will cost Washington more. In the worst case scenario, this could signal a loss of investor confidence in the United States and their ability to fulfill their debt repayment promises, although recent demand for Treasury bonds suggests that the critical point is still far away. Meanwhile, rising Treasury yields are having an impact on mortgage rates, corporate debt, and other types of borrowing, exacerbating housing affordability issues throughout the economy.

Bloomberg: Bessent announced its readiness to expand the government bond buyback program

Bessent said he was ready to expand efforts to buy back more expensive debt and that the administration would introduce a new fiscal initiative to address the highest borrowing costs in recent years. The treasury secretary downplayed the significance of market fluctuations, saying that "everything that happens in 24 hours is noise." He also stressed that the expanded share buyback operations "may exceed $4 billion," which are currently planned for September.

According to Bessent, there is a "very high probability" that the US budget deficit has already reached its peak. He pointed to the resumption of revenue from customs duties as the administration reviews its tariff programs. According to Bessent, economic growth will allow the United States to reduce its debt burden. He noted that while the recent wave of corporate bond issuance "is causing short-term competition for capital," it will also boost productivity growth in the long run. This, in turn, will lead to disinflationary growth, he said.

Reuters: Dollar falls amid investors' assessment of market rescue measures

The dollar declined on August 21 and is likely to lose more than in previous weeks, as investors viewed the U.S. Treasury's bond buyback program as only a temporary solution, while expressing renewed concern about the increasingly interventionist approach of officials. Bessent said the day before that it could further increase the volume of Treasury bond repurchases by the government a day after the agency announced its intention to double the volume of repurchases of long-term securities over the next quarter in an attempt to stop the sharp rise in yields.

The US dollar showed a weekly decline of about 0.9% and was last at 98.76, remaining near a three-month low against a basket of six other currencies. The yield on 30-year US Treasury bonds rose by about 1.4 basis points to 5.2508% on August 21, while the yield on benchmark 10-year bonds stabilized at 4.7041% after rising by 4.5 basis points.

Axios: the positions of the Fed and the Ministry of Finance differ

Although Federal Reserve Chairman Kevin Warsh wants to give markets more space to respond to economic changes, the Treasury Department's intervention signals that there are limits to how much market movement Washington is willing to tolerate. The result is a contradictory combination of policies.: The Fed is trying to exert less influence on financial markets, while the Treasury Department is showing greater willingness to intervene when market fluctuations become unfavorable.

The yield on 30-year bonds has reached its highest level since 2007. The relief brought by the Finance Ministry's decision to buy back the bonds turned out to be fleeting, as economists had predicted. The yield was about 5.25%, which was almost the same as before the Ministry of Finance intervened. While Warsh advocates expanding the role of markets in determining financial conditions, Bessent has made lowering borrowing costs a central part of the Trump administration's housing affordability agenda.

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Associated Press: Why Bessent's measures to stabilize the bond market have not worked so far

Wall Street investors remain concerned about rising government debt, significant borrowing by technology companies, and the Fed's commitment to fighting inflation. The yield on 10-year Treasury bonds, a key indicator for mortgage rates, rose again to 4.69%. This is almost the level before Bessent surprised the financial markets by announcing that the Ministry of Finance would double the volume of the bond buyback program. The purpose of bond buybacks is to reduce the supply of bonds with a maturity of 10 to 30 years and increase their price. Bond yields fall when their price rises.

Total government debt topped $40 trillion, a staggering record just a few months after it surpassed $39 trillion for the first time in April. The Congressional Budget Office estimates that the budget deficit will exceed $2 trillion this year, which is a significant indicator for a period without a recession. Another factor contributing to profitability growth is the amount of borrowed funds raised by large technology companies to build data centers for artificial intelligence. The huge number of bonds they issue provides investors with more choice, which lowers bond prices and increases their profitability.