High long-term US yields shows concern over fiscal deficits: Fed's Waller

ReutersLast Updated: Feb 18, 2025, 08:00:00 AM IST

Synopsis

Fed Governor Chris Waller explains that rising long-term bond rates, despite Fed rate cuts, stem from concerns over large U.S. fiscal deficits and the market's ability to absorb them.

Long-term bond rates have risen despite Fed rate cuts because of concern about large U.S. fiscal deficits and the ability of global investors to absorb it all, Fed Governor Chris Waller said on Monday.

"When I've talked to market participants, one of the standard stories I hear is they are generally concerned about large fiscal deficits that have to be financed," Waller said. "The markets are going to have to absorb this...and they are demanding a term premium...They are not really pricing in a lot of inflationary effects."

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