Global investors dump US debt, forcing interest rates to decades-high levels
Global investors are abandoning US government debt, pushing American and world interest rates to their highest levels in decades.
Investors have lost confidence in US fiscal strength and are selling US government bonds at speed. The 10-year government bond yield jumped from about 4.65 per cent to more than 5.2 per cent in a month.
American national debt has expanded beyond $US40 trillion. China and European funds are switching to gold and other assets, fearing both the risk and America's willingness to use its financial system for political sanctions.
When major economies stop buying US debt, America must offer higher interest rates to attract cash, which swells its annual interest bill. Australia is locked in step: our 10-year bond yield jumped from less than 5.1 per cent to more than 5.4 per cent in the same period.
Why it mattersHigher global interest rates force central banks like the RBA to raise their own rates, making mortgages, loans and credit more expensive for ordinary Australians.
AustraliaThe RBA is almost certain to hike the cash rate today as global bond yields force its hand. Australian mortgage holders will face higher repayments as the trend continues.
✓ Claims checked against the source and corrected before publish. checked 4 h ago
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