The marginal buyers of US Treasuries have shifted from price-insensitive central banks to households and mutual funds, which now account for the bulk of net new Treasury absorption, with households alone taking down over half of recent net increases. The 10-year Treasury term premium now sits between 0.8% and 1.37%, the highest sustained level in nearly a decade, reflecting growing investor uncertainty about the economic outlook. The US government is projected to issue roughly $2 trillion in net new Treasuries annually over the next decade, and private buyers now demand higher and more consistent yields to absorb this supply. This dynamic played out visibly in April 2025 when tariff-related volatility created stress in fixed income markets, with some auctions coming in notably weak and dealers forced to absorb more inventory than usual. Elevated term premiums translate into higher borrowing costs for companies, higher mortgage rates for homebuyers, and an amplifying effect on the government deficit through increased interest expenses.
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