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.

  • Monument@lemmy.sdf.orgEnglish
    81·
    1 day ago

    That’s unlikely to happen, and in my layperson’s understanding, that’s probably as bad as a collapse in housing prices.

    The U.S. housing market is currently supply constrained, according to this Brookings podcast.

    Between the above supply constraints, corporations/venture capital funds snapping up houses, yo-yoing tariffs either driving up costs or creating uncertainty for builders, and climate change rendering millions of homes uninsurable/unfixable in case of disaster, the demand will only increase.

    At the same time, a weakening dollar and soaring rates will make houses more expensive to buy and finance.

    There will be a real-estate reckoning. I just don’t see it happening irrespective of other factors. I’m more worried about people who don’t have a house or don’t have some way to protect themselves from the economic hell that has yet to unfold.

    • Buffalox@lemmy.world
      2·
      23 hours ago

      Interesting, I never thought of it that way, I just thought bad economy would lead to lower house prices.

      • Monument@lemmy.sdf.orgEnglish
        2·
        13 hours ago

        Yeah - I mean. I’m not an economic analyst by any means, but a lot of people keep expecting a housing market “correction” in the U.S., but one keeps not materializing.

        Usually consumer sentiment is self-fulfilling, but the market and the government seem intent on white knuckling their way through this, through whatever shenanigans they have to pull. Ultimately, I sort of think a hyperinflation scenario is becoming more likely.