The United States is experiencing inflation. In addition, fuel prices are rising in the country.
Trying to cope with the emerging economic problems, the Federal Reserve System (FRS) raised rates.
The figure reached 5.5%, which is the maximum over the past 16 years.
Under such conditions, the government bond market collapsed. Another problem has arisen: the US national debt has become even higher.
The situation with government bonds in the USA
At the beginning of last week, the country recorded an increase in government bond yields – up to 5%. This is the first time this situation has occurred since 2007.
This led to a serious decline in the value of securities. The figure was the lowest in the last 16 years.
This is due to the sale of short bonds against the backdrop of an increase in the Fed interest rate: new securities provide higher yields than previously issued ones, – MIA quotes the words of economist Artyom Golubev.
What could this lead to?
In conditions of low demand for securities and their sales, as well as against the backdrop of rising government debt, a very difficult situation may arise in the United States.
Experts do not rule out a serious economic downturn in the country before the end of 2023.
