The interest rate Washington pays to borrow for 30 years closed at 5.66% on Monday, October 5, its highest close since July 2001, according to the Treasury Department’s daily yield data. The 10-year yield closed at 5.31%, the highest since May 2002, and the 20-year at 5.70%, the highest since June 2002.
The climb came fast. On September 22 the 10-year stood at 4.96% and the 30-year at 5.29%. On January 2 they were 4.19% and 4.86%. They reached 5.29% and 5.64% on September 30, eased to 5.24% and 5.61% on October 1, and then rose past the September highs on Monday.
Treasury has tried to slow the rise by buying back its own long-dated bonds. On August 19 it said it would at least double the size of its buybacks of 10- to 30-year securities from the usual $2 billion. On September 9 it announced a $6 billion buyback of 10- to 20-year bonds, three times the usual size, and said future operations would be at least $4 billion. Yields kept rising after the announcement, CNBC reported. “Hank Paulson’s bazooka this is not,” fund manager Mark Spindel told the network.
Wall Street strategists had warned it would not be enough. Goldman Sachs strategists George Cole and William Marshall wrote in an August 21 note that the expanded buybacks do “not address what we see as the main sources of recent long-end volatility” and are “unlikely to meaningfully reset rate levels even if scaled up,” TheStreet reported.
The cost lands on a large bill. Washington ended its fiscal year owing $40.17 trillion, and every long-term bond it sells now carries the highest rate in about 25 years. The Partisan reported in September that nearly a fifth of every dollar Washington collects already goes to interest.
Texans help pay that interest through their federal taxes, and they have no say over how much Washington borrows or what it agrees to pay. That arrangement is also one Texans can choose to change.
Comments have moved. The real debate about Texas independence now happens with thousands of Texians in the app.
Get the TEXIAN app
