With no clear plan to curb government spending in the US or in Australia, investors are pushing up interest rates to decade highs.

The US Treasury increased the amount of debt it is buying back, but the buybacks only had a brief impact on the market.

Investors concluded the buybacks don’t change the underlying picture: increasing US government financing needs, fears of rising inflation, as well as growing corporate bond issuance to fund AI and data centres. All these forces tend to push interest rates higher over the medium to long term, and no financial engineering can undo this reality.