President Trump doesn’t consider economic concerns in Iran talks
President Donald Trump told reporters that the economic situation of Americans is not factored into his decisions regarding Iran.
Amid growing concerns about inflation in financial markets, 30-year U.S. Treasury bonds hit their highest yield in about 20 years on May 19th.
The yield on the 30-year bond was about 5.2%, the highest since 2007. Bond yields (interest rates) rise when prices fall and vice versa.
Traders and investors have been selling off bonds of all durations because the value of the bonds they offer declines as prices rise across the economy. Since the start of the Iran war, inflation has skyrocketed, increasing the prices of goods needed for energy and transportation.
Steve Blitz, chief U.S. economist at GlobalData, said the large increase had no immediate implications for consumers. Because most mortgages are only held for about 6 to 7 years, mortgage interest rates are lower than 10-year bonds. Credit cards and other similar products use short-term interest rates.
Blitz expects long-term investors such as pension funds will begin to gravitate toward 30-year bonds to ensure higher returns for account holders if yields remain high. But he pointed out that that means they sell shares to free up funds.
U.S. stocks have been under pressure in recent days for other reasons, in part because yields have been rising. Rising borrowing costs are weighing on some fast-growing companies that dominate the stock market. But all levels of government, from local park districts to the U.S. Treasury, would also have to pay more at the expense of taxpayers.
