The rise in long-term interest rates in the United States is attributed more to the burden of bond supply from the government and the private sector than to the credibility of the Federal Reserve (Fed). Mohamed El-Erian, Chief Economic Advisor at Allianz, stated on the 24th via X that the market is facing a massive schedule of public and private bond issuances. He explained that funding from China, Japan, and the Gulf Cooperation Council (GCC) is unlikely to sufficiently support the demand for U.S. Treasury bonds. El-Erian noted that ahead of Fed Chair Kevin Warsh's speech at Jackson Hole on the 28th, some experts might argue that the bond market is testing the Fed, but there is a lack of concrete market indicators to support this. The causes of rising long-term interest rates are interpreted not only as signals of the Fed's monetary policy but also as issues related to bond supply. In a situation where the U.S. government's fiscal needs and the demand for funding in the tech sector are both increasing, the adequacy of long-term funding is becoming the market's focus. Long-term interest rates refer to the yields on bonds with longer maturities, such as government bonds or corporate bonds; when interest rates rise, bond prices fall, and the cost of long-term borrowing increases. The market is paying close attention to the Jackson Hole Economic Policy Symposium taking place from the 27th to the 29th, and the reactions to long-term interest rates and Fed policy signals will be clarified following Warsh's remarks.
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