From Yahoo Finance: 2025-05-27 16:02:00

Treasury Secretary Scott Bessent aims to lower long-term Treasury yields with a plan to reduce the supplementary leverage ratio for banks. The move has gained support from the banking sector and could potentially stimulate economic growth by freeing up banks for more lending. Uncertainties over Trump’s tariff policies have raised concerns about U.S. government debt.

The potential revamp of the SLR, supported by the Trump administration, could reduce long-term borrowing costs and add more Treasurys to bank balance sheets. However, doubts remain about the effectiveness of this strategy. Chief investment officer Peter Boockvar is skeptical that lowering the SLR will significantly impact Treasury yields, as banks may not be eager to increase their Treasury holdings.

Amidst these uncertainties, U.S. government debt rallied after Japan hinted at adjusting its issuance, causing a drop in yields. The stock market saw a boost as Trump delayed a tariff decision on EU imports. The effectiveness of lowering the SLR in reducing Treasury yields remains to be seen, as doubts linger about banks’ willingness to increase their Treasury holdings.

Read more: Treasury Secretary Bessent has a plan to bring down long-term yields. But will it work?