Structural demand for US debt, which underpins the dollar-based international monetary system, stays robust in opposition to the backdrop of latest volatility within the Treasury market, Moody’s Traders Service stated on Monday.
The corporate added that US monetary regulators have taken a collection of measures to enhance the flexibleness and effectivity of the treasury market, and it expects the market construction to proceed to evolve.
“Going ahead, because the Fed reduces its holdings of Treasuries, international central banks, pension funds, insurance coverage corporations and households will probably be market stabilizers,” Moody’s stated in a observe to purchasers.
Earlier this month, Moody’s downgraded the US credit standing outlook to “detrimental” from “secure”, citing massive fiscal deficits and low debt sustainability.
Federal spending and political polarization have been a rising concern for traders, contributing to a selloff that pushed U.S. authorities bond costs to 16-year lows in mid-October.
Treasury yields have risen this 12 months on expectations that the Federal Reserve will maintain financial coverage tight, in addition to on monetary considerations targeted on america.
(Reporting by Manya Saini in Bengaluru; Modifying by Shaunak Dasgupta)
First printed: November 20, 2023 | 11:32 pm he
(Tags for translation) Structural demand