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The discussions surrounding Treasury securities also reflect a changing landscape regarding who is buying these instruments. Guha indicated that the buyers of Treasuries have evolved, with domestic investors needing to absorb more of the additional debt issuance as foreign demand weakens. This phenomenon may lead to upward pressure on yields, as these struggling fiscal dynamics may necessitate higher yields to attract sufficient domestic buyers.
Guha noted that while recent economic outlook trends may constrain immediate yield increases—specifically at the crucial 4.5% level—there’s an underlying concern that, should economic conditions stabilize positively, yields could rapidly approach 5%, which may pose challenges for other markets, such as equities.