US long-term interest rates rose to the highest level of the year on Wednesday, threatening the “green shoots” of recovery, after the latest sale of 10-year government debt met with a tepid response from inflation-wary investors.
Concerns about the growth of government borrowing forced the US Treasury to give investors in an auction of $19bn in 10-year notes a yield of 3.99 per cent ”“ 4 basis points higher than the yield available before the auction. That constituted the biggest yield markup since a 10-year auction in May 2003, said Morgan Stanley. Yields on the 10-year note, the benchmark rate for US mortgages, hit a high of 4 per cent during the day, up from 3.6 per cent a week ago.
Of course this rise in interest rates was going to happen. It will probably keep going up, and the Jimmy Carter days of stagflation will be with us again. If you have several hundreds of billions of dollars to borrow, and China is sitting there not buying much, then the interests will go up to entice them to buy. Or, we can just start printing the money, and then we can start moving the decimal point of the prices over to the right by one or two places.