IMF warns: Surge in U.S. debt issuance weakens safe-haven premium, driving up global borrowing costs

ME News report, April 15 (UTC+8). The International Monetary Fund (IMF) warned on Wednesday that the continued rise in U.S. Treasury issuance is eroding the safety premium it has traditionally enjoyed, pushing up global borrowing costs. Over the past three years, the U.S. budget deficit has averaged 6% of GDP, an unusually rare level in history, and is expected to remain at that level over the next decade. The IMF also said that the spread between AAA corporate bonds and Treasuries has narrowed, indicating that the attractiveness of U.S. Treasuries is declining. The spread has narrowed from 55 basis points at the beginning of 2019 to about 35 basis points. In addition, the IMF warned that the U.S. Treasury Department is overly reliant on issuing short-term debt. U.S. Treasury Secretary Bessent previously said that expanding long-term issuance is meaningless because long-term Treasury yields are higher than short-term bills. (Source: PANews)