Bond Traders’ Angst Seen as Term Premium Turns Positive
- Array of uncertain outcomes under Trump prompting selloff
- Increased debt issuance assumed to finance spending plans
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Bond traders have had enough. For the first time since the start of the year they’re demanding a premium for holding long-term debt after Donald Trump’s election victory ratcheted up expectations for U.S. economic growth and inflation.
The term premium for 10-year Treasuries, which represents the extra compensation investors demand to hold the debt instead of a series of shorter-dated notes, turned positive Monday for the first time since January. The measure was at about 0.01 percentage point as of Nov. 15, after rebounding from a record low of about negative 0.75 percentage point in July, Federal Reserve Bank of New York data show.