US long-term borrowing costs ease after government steps in

Long-term borrowing costs in the US eased on Wednesday after the Treasury department announced it would buy back more debt.

The move came after the interest rate on 30-year bonds, which are a type of debt used to raise funds from investors, hit 5.34% on Tuesday - the highest level in almost 20 years.

The high rates, known as yields, affect the rate the US government and major corporations can borrow money at, but also impact borrowing costs consumers pay on the likes of mortgages, car loans and credit cards.

The recent surge in bond yields has been driven by rising oil prices caused by the US-Iran war, with investors concerned over inflation.

There are also fears over government debt and the huge amounts of cash being borrowed by tech firms to develop Artificial Intelligence (AI), with the timeline and level of returns on investment uncertain.

The Treasury Department said its intervention reflected its "desire to provide greater liquidity support" for longer-term bonds.

It announced it would increase its buyback operations by "at least double" from $2bn to $4bn and will be effective from 9 September to 4 November.

The rate on borrowing costs over 30 years eased on the back of the move to 5.18%.