Repeated US Treasury interventions risk an erosion of credibility
A key policy tool to stabilise stress in markets could turn into a source of moral hazard and deeper volatility
Source: Financial Times
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DW NOTE
The Treasury has intervened in bond markets three times since June to suppress yields. Each time officials called it a temporary measure to restore orderly function. Each time yields resumed rising within weeks. When your emergency tool becomes a quarterly ritual, it stops being emergency liquidity and starts being yield suppression — funded by the same deficit that's driving yields up in the first place. The 10-year is at 5.27% despite the interventions, not because markets are dysfunctional, but because they're pricing $1.4 trillion deficits against 3.4% inflation.