US Treasury Forced Into Shorter-Term, Higher-Cost Debt as Yields Surge
Washington is replacing longer-dated, lower-cost borrowing with shorter-term, more expensive debt as long-end rates climb, according to The Kobeissi Letter.
The U.S. Treasury is being pushed toward shorter-dated issuance at higher financing costs as long-term yields rise, according to The Kobeissi Letter. It compared the situation to refinancing a 30-year fixed mortgage at 3% into a one-year adjustable mortgage at 4%.
Applied to trillions of dollars, that means the government is replacing longer-term, lower-cost debt with shorter-term, higher-cost debt. The commentary said the Treasury has limited flexibility and is largely playing the hand it has been dealt.
The post described the move as the next phase of the U.S. deficit spending crisis beginning today, with the surge in long-term yields as the main driver.
Source: The Kobeissi Letter