Government borrowing costs hit highest level since 2007
Summary
The cost for the U.S. government to borrow money has reached the highest level since 2007. This increase in borrowing costs is raising interest rates on mortgages and credit cards, partly due to higher oil prices and ongoing conflicts affecting global supply.Key Facts
- The 30-year U.S. Treasury bond yield rose to 5.32%, the highest since 2007.
- Higher bond yields lead to higher interest rates on consumer loans like mortgages and credit cards.
- An ongoing conflict involving Iran has disrupted oil supply, pushing global oil prices above $91 a barrel.
- The Strait of Hormuz, a key route for about 20% of the world’s oil, is nearly closed due to the conflict and U.S. actions.
- The average gas price in the U.S. increased to $4.06 per gallon, up from $2.98 before the conflict.
- Inflation rose by 3.4% in July compared to last year, above the Federal Reserve’s target of 2%.
- The Federal Reserve has not increased interest rates yet, fearing it could slow down the economy.
- Market expectations show only a 34% chance of a rate hike at the Fed’s next meeting in September.
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