U.S. 30-Year Real Interest Rate Rises to 3.00%, Impacting Risk Asset Valuations

The U.S. 30-year real interest rate has risen to 3.00%, affecting the market with long-term interest rate pressures. As of August 21, the yields on U.S. Treasury bonds were reported at 4.74% for the 10-year, 5.25% for the 20-year, and 5.27% for the 30-year bonds. The real interest rate is the nominal rate adjusted for inflation, and an increase in long-term real interest rates raises the cost of capital for businesses and leads investors to increase discount rates. CNBC columnist Michael Santoli analyzed that rising long-term real interest rates could constrain growth and stock valuations. The U.S. Treasury announced on August 19 that it would expand the liquidity support buyback for long-term nominal coupon bonds to a minimum of $4 billion per auction. This policy will take effect on September 9. The U.S. Census Bureau reported that housing starts in July decreased by 12.4% to an annualized rate of 1.239 million units. In contrast, Walmart announced a 5.9% increase in second-quarter sales to $187.9 billion. Experts are analyzing the impact of rising interest rates on growth, consumption, and stock valuations, leading to varied interpretations.

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