US Treasury yields soar
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Why are US Treasury yields soaring to their highest level since 2007?
Good morning from the Financial Times. Today is Thursday, September twenty-fourth, and this is your FT News briefing. US Treasuries are added again, and Iran's president hits back at Donald Trump at the UN. Plus, the UK budget is in a tight spot. I'm Sonia Hudson, Informark Filipino, and here's the news you need to start your day.
The red-hot US economy and the inflation that comes with it has bond investors scared. The yield on the 10-year Treasury rose to 5.12% yesterday. That's its highest level since 2007. Now, this came after a report from SP Global that showed US business output this month accelerated at the fastest pace in five years. Years. This adds to concern that the US economy is running too hot and that inflation is getting out of control thanks to the energy price increases caused by the war in Iran. Bond yields first jumped above five percent a couple weeks ago.
Iran's president Masood Pazeshkian responded yesterday to US President Donald Trump's combative speech at the United Nations, but notably absent was the US delegation, which walked out of the room during his speech. Paseshkiyan told the UN General Assembly through a translator that Tehran was prepared to negotiate with the US, but he also warned that the country would not accept Trump's quote bullying.
those who are terrorists and train and protect terrorists describe us as such. We have only defended ourselves.
What does the latest S&P Global report reveal about US business output and inflation risk?
We are not terrorists.
The day before Trump threatened to annihilate the Islamic Republic if it didn't agree to his terms to end the war. Also at the UN yesterday, anthropic co-founder Dario Amade urged the Security Council to pursue narrow AI safety agreements, like a ban on the use of models to build biological weapons. This comes as the AI industry is concerned that humans could lose control of the technology. Amade said earlier this month that Anthropic would slow down its AI development to address those worries.
UK Prime Minister Andy Burnham's government is facing its first major test in a few weeks, the budget. Chancellor John Healy said earlier this month that the British economy was, quote, turning a corner, but that optimism has been undermined by another surge in oil prices from the Iran war. Healy is now under pressure from higher borrowing costs, weaker growth expectations, and Burnham's desire to help. I'm joined now by the FT's Sam Fleming to talk more about this. Hi, Sam.
Oh there.
So just how difficult is the UK budget situation for Healy?
This is a very tough budget for John Healy. It'll be his first budget as Chancellor. He and Andy Burnham recently took power as the new people in charge of the Labour Party and the current government. And the backdrop to this budget is a tough one because energy prices have been rising, inflation is rising, and critically government borrowing costs are rising around the world.
How did Iran’s president respond to Donald Trump’s UN speech and what negotiations are on the table?
And that is driving up interest costs for the current government and potentially, therefore damaging the fiscal position of the country and forcing the Chancellor to make some corrections, to do some tax hikes or spending cuts in the upcoming budget.
Okay, so tax rises and spending cuts are one option. What else is Healy considering?
So back in March, the Office of Budget Responsibility, which is the government's fiscal watchdog, projected that the fiscal buffer, the kind of wiggle room that the government had against its key budget rule, was around twenty-three, twenty-four billion pounds. Um, that is widely expected to have fallen when the next set of forecasts get presented alongside the budget on October the twenty-eighth. So the question really is, assuming that is correct because of the factors we've been discussing, that the headroom could even have been halved or even more as a result of these various factors that are going against the Chancellor. The question is what to do about it. Now, there's one option is that they don't actually fully rebuild the buffer back to where it was back in March.
So they accept a slightly smaller surplus at the end of the forecast horizon on the current
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Chapters
7 chapters
1
Why are US Treasury yields soaring to their highest level since 2007?
0:02–2:00
2
What does the latest S&P Global report reveal about US business output and inflation risk?
2:00–3:38
3
How did Iran’s president respond to Donald Trump’s UN speech and what negotiations are on the table?
3:38–5:09
4
Why are AI experts urging the UN to ban AI models for biological weapons?
5:09–6:58
5
What challenges does the new UK government face with the upcoming budget?
6:58–8:14
6
How might Chancellor John Healy balance tax hikes and spending cuts under rising borrowing costs?
8:14–10:08
7
What is the Kremlin‑backed money‑laundering network that helped Rosneft evade sanctions?
10:08–11:22