It was one of the sparks that set the bond markets on fire at the end of last week, causing the US 10-year rate to jump to 1.60%. For its 7-year bond issue, the US Treasury struggled to find a taker. This lack of interest is partly explained by technical reasons, as the 7-year yield did not really follow the upward movement in rates that began in January. But it also reflects a certain caution on the part of investors vis-à-vis the debt of the United States as the economy recovers.
During the Covid crisis, in fact, Treasuries – US government bonds – greatly benefited from their status as a safe haven. ” Now that rates are rising, and in a sustainable way, investors feel less motivated to buy bonds whose value can only fall. », Estimates Stéphane Déo, head of market strategy at Ostrum. When a bond’s yield rises, its price falls. ” In addition, continues the strategist, the violent movements in US yields could distract some investors who hedge against volatility. “