The International Monetary Fund warned Wednesday that the escalating scale of US debt issuance is undermining the premium Treasuries have commanded from investors, with implications for government securities across the globe.
“The increase in the US Treasury security supply is compressing the safety premium that US Treasuries have traditionally commanded — an erosion that pushes up borrowing costs globally,” the Washington-based fund said in its latest Fiscal Monitor report.
The US has been selling large volumes of debt because its budget deficit has averaged roughly 6 per cent of gross domestic product over the past three years — a historically large shortfall outside of wartime or recession eras. The gap is expected to stay…