US Treasurys rebounded slightly after yields hit a near-quarter-century high, amid growing signs that increased borrowing costs are damaging the American economy. Yields across much of the G7 have surged in recent months as investors fret over stubbornly high inflation and unrelenting borrowing, with economists voicing particular worry over a potential European debt crisis.
The US, however, faces its own challenges: Several major commercial real estate deals have been thrown into doubt as buyers demand better terms, while lower-rated corporate borrowers have seen interest rates on their debt increase sharply. Goldman Sachs economists warned that elevated yields could cut US GDP growth by 0.2 percentage points next year, threaten the stock boom, and force the government to prioritize deficit reduction.
