Investors are selling off bonds from the U.S. government, as part of a trade known as “Sell America.”

The United States government has had to pay more to borrow in the global debt markets. On Wednesday, the Treasury department found that there was tepid demand for an auction for $20 billion worth of bonds, and ended up paying a slightly higher interest rate (or yield) than expected.

This has spooked markets. Yields on 30-year U.S. Treasuries have spiked above 5% this week — an unusual, and unsettling, surge in the price that the U.S. government pays on its long-term debt. An increase in bond yields is particularly damaging to the economy because it jacks up the interest rates on many things that consumers pay, such as on mortgages and other loans.

    • Tetragrade@leminal.spaceEnglish
      4·
      2 days ago

      Yeah you can do this. However, it’s not typically profitable, as large financial institutions will bot it until the bond yields drop. The reason it’s profitable here is because bankers are pricing in the (high) probability that in 30 years the US won’t exist to pay out.

      In prior periods this was often possible, it’s called arbitrage. But now our markets are essentially automated and there’s little opportunity for humans to do it.