Trump's Desperate Bid to Tame Markets Fails to Impress

With the midterm elections less than three months away, President Donald Trump's Treasury Department has become increasingly desperate about rising borrowing costs. To combat this issue, the Treasury announced it will double its buybacks of longer-term government bonds to at least $US32 billion ($45 billion) per quarter.

This move aims to bring down 30-year bond yields, which have reached their highest levels since 2007, pushing borrowing costs higher for the government, businesses, and consumers. However, analysts believe that this plan will ultimately fail due to a combination of factors, including inflation in Japan, rising corporate borrowing, and the Trump administration's own policies.

Japanese 10-year government yields have reached their highest levels in 30 years, and with the Bank of Japan expected to resume lifting benchmark interest rates by October, this trend is likely to continue. Additionally, investment-grade corporate borrowing has surged to support the development of artificial intelligence, further driving up bond yields.

The Treasury's actions are seen as a desperate attempt to manipulate market forces, and it remains to be seen whether they will have any lasting impact on borrowing costs. According to analysts, none of the administration's previous attempts to influence market trends have been successful, including its adjustments to capital requirements and support for yen intervention.