Recently, the yield on US Treasury has continued to soar. On April 12, the yield on US 10-year Treasury bonds has risen above the 2.8% mark, setting a new high in this round. The yield has exceeded my country's 10-year Treasury bonds, and the yield on China and the 10-year Treasu

Recently, the yield on US bond has continued to soar. On April 12, the yield on the US 10-year Treasury bond has risen above the 2.8% mark, setting a new high in this round. The yield has exceeded my country's 10-year Treasury bond yield. The yield on the Sino-US 10-year Treasury bond has been inverted.

1. The main reason for the surge in US bond yields

market expects Federal Reserve will raise interest rates in early 45 + hreflate , and may raise interest rates aggressively. In addition, the sanctions from the United States and Europe against Russia have caused international investors to question the credit of the United States and Europe, resulting in the continued soaring of US and European treasury yields. As the huge derivatives system in the US and European bond markets has been surrounded by hedge fund and high leverage, when bond yields soar, institutions and investors operating in reverse passively closed their positions due to heavy losses, which intensified the market's selling wave.

Federal officials have recently made intensive statements that they want to reduce their balance sheet, which means that the Fed will withdraw from the role of the final takeover of the US bond market, which naturally puts invisible pressure on the US bond market. The United States announced that the U.S. Treasury bonds held by the Russian Central Bank were invalid, and decided not to repay Russia's principal and interest, which further shook the credibility of US debt and also hit the U.S. bond market.

2. The total scale of US debt has accelerated its expansion

Currently, the scale of US Treasury bonds is about US$30.38 trillion; as of the end of the third quarter of 2021, the outstanding stock of US corporate bonds was US$10 trillion, and the outstanding stock of US fixed income market, including corporate bonds, reached US$51.8 trillion; the total amount of US household debt increased by US$1.02 trillion in 2021 to US$15.58 trillion.

In fact, the total debt scale of the United States does not match the growth rate of the United States' economic. In the long run, US bonds are a default structure. In order to maintain the security of the US debt system, the United States' current approach is debt assetization and monetization, and strives to push the US debt risks to the world, in order to maintain the "double increase structure" of US dollar issuance and high debt growth.

But this structure requires the support of the credit of the US dollar and US bonds. The problem is: the purchasing power of the US dollar continues to decline due to high inflation . The United States declared that the invalid US Treasury bonds held by the Russian Central Bank has caused the credit of US bonds to be questioned. Therefore, the risk-free asset, US bonds, has experienced high volatility and drifted towards the attributes of risky assets, which is undoubtedly dangerous.

3. Interest rate shock is coming

The Federal Reserve's interest rate hike and balance sheet reduction have caused the United States to face interest rate shocks. The real interest rate in the United States is constantly rising, resulting in a rapid decline in debt financing quota. US stock repurchase funds mainly come from bond financing, which has put pressure on the U.S. stocks.

The total amount of high-yield bond issuance in the United States in the first quarter was only US$34 billion, significantly lower than US$139 billion in the same period last year, and fell to its lowest level since 2016. The IPO issuance in the United States was almost exhausted in the first quarter. As of April 2, less than 24 companies have been listed through traditional IPOs this year, at the lowest level since the worst period of the subprime mortgage crisis in 2009.

The average interest rate for 30-year mortgages in the United States at the beginning of this year was around 3%, and it has now risen to 4.75%. Middle-income U.S. households with middle-income needed 34.2% of their total income to pay for mortgages for mid-priced homes in January, significantly higher than 29% a year ago, according to the Atlanta Federal Reserve Bank of Atlanta.

The rising U.S. Treasury yields have put new pressure on U.S. households and businesses at higher borrowing costs. Coupled with the huge financial derivatives system behind these debts, the U.S. debt risks are continuing to amplify. Judging from the debt structure of the United States, the risk in the corporate bond market is the greatest, because the impact of interest rates is causing the scale of junk bonds in the United States to expand. Not only the United States, given that global debt is at its historical peak, global debt risks are also rising rapidly. (This article is an original article from Xinyueshu Finance. Please indicate the author and source from the Toutiao account Xinyueshu Finance)