Bond yields test Fed efforts

The United States faces a problem in financing its debt, which exceeds $40 trillion, as yields on the ten-year Treasury bonds rise to around 5.32%, the highest level since 2002. This occurs amid gradual shifts in debt management strategies, where the market no longer responds solely to the Federal Reserve's interest rate decisions but is also influenced by other factors such as term premiums, financial market pressures, and debt sustainability. The government estimates that higher refinancing costs will significantly drain federal revenues, increasing pressure on the budget. On the other hand, Washington is moving toward using tools such as relying on short-term bills and repurchasing old bonds to contain yield increases, with the possibility of implementing Yield Curve Control in the future. The goal is to reduce financing costs, but challenges remain, including the impact of inflation on debt and global market policies.

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