Bessent Risks Higher Yields If He Axes 20-Year Bond, BNP Warns
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Key takeaway
US Treasury Secretary nominee Scott Bessent is reportedly considering eliminating 20-year Treasury bond issuance to reduce borrowing costs
- Step 1 · The triggerBessent proposes eliminating 20-year Treasury issuance to cut borrowing costs
- Step 2 · Knock-onissuance concentrates in short-dated bills, reducing long-end market depth and concentrating duration risk
- Step 3 · Knock-onlong-end Treasury yields rise as the scarce-duration premium reprices, steepening the curve
- Step 4 · Knock-onglobal dollar funding benchmarks reprice higher, widening EM sovereign and corporate spreads
- Step 5 · Knock-onIndian banks raise LC-USD swap rates and dollar-loan spreads to protect net interest margin
- Step 6 · Reaches youthe SME's import finance, forward cover, or floating-rate dollar-loan reset costs more
The trigger is reported by the source below. The steps that follow are Branch²’s traced reasoning — how the shock could reach a business like yours, not a prediction.
Source: IN:NDTV Profit
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