Singapore: As Steven Mnuchin considers selling 50- and 100-year US bonds, some of the lowest interest rates available to US presidents are disappearing.
The benchmark US 10-year note yield rose to 2.49 per cent Thursday, matching the average for Barack Obama’s term. No other modern-day presidents have enjoyed lower borrowing costs, based on data compiled by Bloomberg that go back to the 1960s when LBJ was in office. The benchmark has climbed from 1.85 per cent on Election Day, November 8, suggesting those historically low US yields are a thing of the past.
“Yields have backed up,” said Roger Bridges, the chief global strategist for interest rates and currencies in Sydney at Nikko Asset Management’s Australia unit, which oversees $14 billion (Dh51.4 billion). Adding long-term supply may push them higher, he said. “The big question is, is the trend going to continue? Rates may be low today, but once you start issuing them the market can quickly reprice.”
Weightings
A Bloomberg survey of economists projects 10-year yields will rise to about 2.5 per cent by the end of next year, with the most recent forecasts given the heaviest weightings.
Mnuchin, President-elect Donald Trump’s pick for US Treasury secretary, said he’ll explore issuing debt maturing in more than 30 years to cushion the effect of rising interest rates, in an interview Wednesday on CNBC.
Asked if he would consider maturities as long as 50 years or 100 years, Mnuchin said: “We’ll take a look at everything.”
October saw Italy sell €5 billion ($5.3 billion) of 50-year debt and Australia raise a record A$7.6 billion ($5.6 billion) through its debut issue of 30-year bonds.
