US borrows at high interest rates

The US is once again facing weak demand at bond auctions this week, pushing yields higher. On Wednesday, the US Treasury’s seven-year, $44 billion bond auction was priced at 4.650 percent, above the market yield of 4.637 percent. After the auction, the yield on the two-year bond, which is sensitive to the policy rate, came very close to the 5 percent level last reached on May 1. The US Treasury had set yields above the market at both of its bond auctions on Tuesday. This week’s bond issuances clearly reflect the uncertainty over monetary policy due to the lack of improvement in inflation, leading the US to borrow at higher interest rates. “Yields are not only rising again in the US, they are also rising in other parts of the world. This is not good news for the stock market, which is trading at 22 times earnings expectations,” said Matt Maley, Strategist at Miller Tabak + Co.