Economy News

Borrowing costs hit post-2008 highs from Washington to Tokyo; the US Treasury doubles buybacks

Government borrowing costs in several rich economies hit their highest levels since the 2008 financial crisis or earlier on Monday 17 August, as investors bet the Middle East war would keep inflation high, The Guardian reports. The US 30-year Treasury yield rose to 5.29%, its highest since 2007. France's 30-year yield reached 4.86%, a level last seen in September 2008; Germany's 10-year hit 3.21%, the highest since 2011; and Japan's 10-year rose to 2.93%, the highest since 1996.

On Wednesday 19 August the US Treasury said it would double its buyback of government debt to provide “greater liquidity support”, and yields dropped. The same day, minutes of the Fed's July meeting showed many officials thought tightening would likely be needed if inflation did not decline. The two-month US-Iran ceasefire had expired on Monday with no talks scheduled.

How each outlet framed it

• The Guardian — an inflation story: money markets priced an almost 85% chance of an ECB hike in September, and yield rises push up mortgage costs, as US loans are backed by Treasuries.
• ABC News (Australia) — a structural story: big-spending governments and AI companies competing for cash. An analysis says the US now pays $1.2tn a year in interest; Bessent's buying cut the 30-year rate from 5.33% to 5.19%, but it was back at 5.25% by Friday.
• ABC News (Australia) live coverage — twin milestones: US debt passed $40tn as Australia's hit $1tn.

What we don't know yet: whether buybacks can hold yields down. ABC's analysis argues Treasury had to issue shorter-term debt to fund the purchases, so neither the debt nor the deficit changed.