On August 19, the U.S. reached a grim milestone with its total debt obligations. It topped $40.05 trillion. The figure spooked the bond market, where Treasury yields started to rise.
The Treasury Secretary, Scott Bessent, announced his department would support the Yen (FXY). Japan owns over $1.1 trillion in U.S. Treasury securities. The news pushed the yen higher but gave back around half of that rally.
Bessent said that he would buy long-term Treasuries using short-term debt. Yields on the 30-Year Treasury (TLT) fell at first, only to resume their rise. The 10Y, 30Y, and 12-month Treasury securities are near their 52-week high.
Stock markets priced in little to no worry. The Nasdaq (QQQ) and Russell 2000 (IWM) are steady. But the TLT ETF risks re-testing its 52-week low of $81.17. It closed at $81.95 on September 2.
In the last few years, the multi-decade low Yen, 40-Year Japan bond yield, and weak U.S. 30Y Treasury proved temporary. The media would report that a crisis brewed, only to find that their weak performance would end.
Rising commitments to build AI data centers are boosting investments. The rising economic activity gives the bond market room to offer higher yields. Stock markets are not panicking. Stocks like NVIDIA (NVDA), Meta Platforms (META), and Dell Technologies (DELL) traded higher in the last day.
