According to Vision, the U.S. Pending Home Sales Index for September 2023—which measures signed but not yet closed existing home contracts—fell sharply by 7.3% month-on-month and 11.3% year-on-year to 66, the lowest level since 2001. The main reason is the significant rise in yields on 30-year U.S. Treasury bonds, pushing mortgage rates to high levels. For example, as of last week, the average U.S. mortgage rate rose to 7.4%, compared to 6.66% at the end of August.
Looking back a few years, U.S. government debt had been continuously expanding. At that time, some central banks began reducing their holdings of U.S. Treasury bonds and shifted reserves into gold, but the impact on the overall financial market remained limited. Recently, an increasing number of central banks and investors have been selling off long-term U.S. Treasury bonds, driving yields on 10-year and longer U.S. Treasuries sharply higher, reaching their highest levels in over 20 years. This can be seen as a warning signal from the market, reflecting rapidly weakening confidence in U.S. government debt. This shift appears to have begun affecting the U.S. housing market. It is evident that the expanding U.S. government debt is deepening its negative impact on the U.S. economy. Everbright Bank Chief Market Strategist, Herman Woon
*Articles published in Economic Information, whether signed or unsigned, represent the personal opinions of the authors and do not necessarily reflect the views of Economic Information. Economic Information serves as a platform for free expression.
Looking back a few years, U.S. government debt had been continuously expanding. At that time, some central banks began reducing their holdings of U.S. Treasury bonds and shifted reserves into gold, but the impact on the overall financial market remained limited. Recently, an increasing number of central banks and investors have been selling off long-term U.S. Treasury bonds, driving yields on 10-year and longer U.S. Treasuries sharply higher, reaching their highest levels in over 20 years. This can be seen as a warning signal from the market, reflecting rapidly weakening confidence in U.S. government debt. This shift appears to have begun affecting the U.S. housing market. It is evident that the expanding U.S. government debt is deepening its negative impact on the U.S. economy. Everbright Bank Chief Market Strategist, Herman Woon
*Articles published in Economic Information, whether signed or unsigned, represent the personal opinions of the authors and do not necessarily reflect the views of Economic Information. Economic Information serves as a platform for free expression.