Treasury Term Premium Surge Unsettles US Bond Investors Arabian Post
Arabian Post Staff -Dubai
Wall Street is confronting a fresh source of pressure on US government bonds as the extra compensation investors demand for holding longer-term debt climbs to its highest level in more than a decade.The so-called term premium on 10-year Treasury securities has risen by roughly 40 basis points since mid-September to about 0.98%, according to a model maintained by the Federal Reserve Bank of New York. That is its highest reading since 2014 and helps explain why borrowing costs have continued rising despite uncertainty over the Federal Reserve's next policy moves.
The increase exceeds the roughly 30-basis-point rise in benchmark 10-year yields over the same period, suggesting that changing perceptions of long-term risk, rather than expectations for short-term interest rates alone, have been driving the latest phase of the selloff.
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