Sept 16 (Reuters) - Surging government bond yields are raising credit costs across the U.S. economy and could factor into Federal Reserve monetary policy deliberations, but analysts see the central bank resisting any explicit call from the Trump administration ​to bail out the market.The focus on the Fed's possible involvement comes as Treasury Secretary Scott Bessent has taken an unusually activist role in trying to tamp down rising yields ‌he considers to be misaligned with the U.S. economic outlook. Bessent’s campaign, which saw the expansion of a key debt buyback operation last week, is foundering, as the 10-year Treasury note rose above 5% to its highest since 2007. He shrugged the move off as owing to "global issues" on Tuesday as he arrived for a congressional hearing.Treasury’s bond market travails are raising questions whether the Fed might be requested to buy government debt to reduce supply, which could cap or lower yields, in turn easing government and private sector ​borrowing costs.Fed watchers see little prospect for that outside of markets tumbling into distress, though there's little evidence of that so far even with the steady slide in prices. That said, the question ​has persisted given comments by Fed Chairman Kevin Warsh that have signaled a greater willingness to coordinate with Treasury on some issues. “One of the Fed's unwritten mandates is ⁠financial conditions,” said Rick Rieder, BlackRock Inc's chief bond investment manager, who was under consideration by Trump to be Fed leader. Noting that Fed policymakers influence the cost of debt through their adjustments to short-term interest rates, ​he said that "has to be part of the criteria they consider" in any monetary policy decisions.The Fed on Wednesday is expected to wrap up its two-day meeting with policymakers raising their policy rate by a quarter percentage point to ​3.75% to 4.00% because recent inflation readings have been too high. Market participants believe this could help Treasury's cause because it will bolster the Fed's inflation-fighting credibility, which should help longer-dated yields come down over time.A Deutsche Bank poll of investors released Monday found that investors see a rate hike now as likely lifting yields slightly over the short term, but they see long-term yields going up even more if the Fed were to leave rates steady.If the Treasury encounters significant headwinds selling its debt or ​there were other market dislocations, the Fed could be drawn in more to buy debt to calm conditions, Rieder said. That makes it important to watch how coming debt auctions perform.Most analysts agree any harder push ​by Treasury calling on the Fed to intervene and buy bonds in large size to cap yields is a no-go for central bankers.Warsh “cares a lot about the Fed’s credibility – and about his own,” said Lou Crandall, chief economist with Wrightson ‌ICAP. The Treasury ⁠has damaged its credibility with its market interventions and the Fed leader “will have no desire to let the Fed get sucked into that. The stakes are even higher for the Fed than the Treasury.”For his part, Bessent on Tuesday called the upsized buybacks a success.Mark Sobel, a former Treasury Department official under both Republican and Democrat administrations and now U.S. chair of the OMFIF monetary policy think tank, said “the administration could conceivably push the Fed to engage in a form of quantitative easing or yield curve control, in essence seeking cheap budget funding and financial repression.” But like Crandall, Sobel believes Warsh would push back against getting involved.The case for Fed involvement goes to firepower. ​Treasury interventions are constrained to the money that it ​has on hand. The Fed, in contrast, can create ⁠money, allowing it in theory to purchase a limitless amount of bonds if required.Buying bonds in large size — called quantitative easing — is now an established part of the Fed's tool kit, first used during the 2007-2009 financial crisis and again in the COVID-19 pandemic.Economists largely agree past purchases have helped calm distressed markets, signaled the Fed’s ​commitment to stimulative monetary policy, and likely kept borrowing costs lower than they would otherwise be.During and emerging from World War II, the Fed had ​actively worked to cap borrowing ⁠costs at the Treasury's behest. But it stopped doing so following the Treasury-Fed Accord of 1951, which separated government debt management from monetary policy.Buying bonds now at Treasury’s behest would not only upend that long-standing pillar of Fed independence, it would clash with the Fed’s effort to bring inflation back down to its 2% target, which markets expect mean one or more increases in the Fed's short-term policy rate.Moreover, buying bonds in enough size to impact yields would also cause ⁠a big expansion ​in the Fed’s balance sheet, and Warsh wants Fed overall holdings, now at $6.7 trillion, to be smaller.Also arguing against Fed intervention is a ​sense among some at the central bank that higher yields exist for legitimate reasons.New York Fed President John Williams told CNBC on September 2 that rising yields are “more of a reflection of the strength of the economy” coupled with aggressive technology investment levels. He also shrugged off ​the Treasury’s interventions as a factor for Fed policy and noted what the department is doing “doesn't complicate my job or our job making monetary policy.”Reporting by Michael S. Derby; Editing by Dan Burns and Andrea Ricci

Bond market woes likely a factor for Fed, but intervention seen as unlikely

Sep 16 (Reuters) - Futures tracking Canada's main stock index rose on Wednesday as oil prices and bond yields paused after a recent surge, while investors ​braced for a widely anticipated interest-rate hike from the U.S. Federal Reserve.September futures ‌on the S&amp;P/TSX index were up 0.15% at 6:18 a.m. ET. The index fell 0.3% on Tuesday after the 10-year U.S. Treasury yield rose above 5% on ​concerns over high inflation and growing government debt load. Markets, betting that ​Fed policymakers will lift the benchmark rate by 0.25 percentage point ⁠to a 3.75% to 4% range, signal further tightening ahead. The policy decision ​is due at 2:00 p.m. ET (1800 GMT).The 10-year Treasury yield dipped to ​4.99% after surging to a multi-decade high of 5.04% on Tuesday.Oil prices fell after reports of Saudi Arabia offering additional crude cargoes via Oman eased concerns about the ​Middle East supply disruptions. Brent crude was last down 0.9% at $107.76 a ​barrel.A surge in global bond yields has weighed on equity markets in recent weeks ‌as ⁠investors fear central banks will keep monetary policy tighter for longer to tame inflationary pressures stemming from soaring energy prices.Gold prices climbed more than 1% ahead of the Fed decision.In other news, European Commission President Ursula von ​der Leyen said the ​European Union is ⁠opening the door for Canada to become its first "associate member," a status that is not set out in ​the bloc's treaties.The EU and Canada will work together ​across sectors ⁠including manufacturing, AI, critical minerals and energy, she said.Canadian Prime Minister Mark Carney's trip follows a historic breakdown in Canada-U.S. relations after trade talks collapsed ⁠last month, ​sparking a series of tit-for-tat tariff measures.FOR ​CANADIAN MARKETS NEWS, CLICK ON CODES:TSX market reportCanadian dollar and bonds report CA/Reuters global stocks poll ​for Canada ,Canadian markets directoryReporting by Darshan Kumar in Bengaluru; Editing by Shreya Biswas

TSX futures inch up ahead of US Fed decision

Sept 16 (Reuters) - Euro zone benchmark Bund yields hovered around 17-year highs on ​Wednesday as traders paused after raising bets on further European Central Bank rate increases as inflation concerns persist, ‌briefly pricing the deposit rate above 3.5% this week.Markets were also awaiting the Federal Reserve policy meeting decision later in the session, with traders widely expecting an increase of a quarter of a percentage point to a 3.75% to 4.00% range and guidance pointing to further tightening. Germany's 10-year bond yield was up one ​basis point at 3.54%, after reaching 3.5723% on Tuesday for its highest since June 2009.“Hopes are high for the ​Fed to upend the severe bond market sell-off,” said Commerzbank rate strategist Hauke Siemssen.“While the increase in ⁠oil prices was still the major driver of late, a determined Fed could calm investors' nerves, at least at the long-end.”The ​benchmark 10-year U.S. Treasury yield was slightly higher at 5.0% after reaching 5.041% on Tuesday, the highest since July 2007. NATURAL GAS PRICES ​STILL UPBrent crude oil futures retreated after a two-day rally, pressured by an unexpectedly large build in U.S. crude inventories, and gas prices were up about 2.5%. Traders see the ECB's deposit rate at 2.86% by December, up from the current 2.50%. Markets expect the rate to reach 3.38% by November 2027, ​fully pricing a third increase and pointing to a roughly 50% chance of a fourth move.The ECB raised rates last week for ​the second time this year to quell inflation that has been driven higher by rising energy prices and warned that price pressures could prove ‌lasting, fuelling bets ⁠on more tightening.Some analysts argued that expectations for rate increases had gone too far, saying higher energy prices would weigh on growth and help to dampen inflation.German two-year bond yields , more sensitive to policy rates, were up one basis point at 3.24% after reaching 3.3123% on Monday for their highest since September 2023.The ECB's updated wage tracker is pointing to a modest increase in negotiated pay growth ​in the first half of ​2027 after broadly steady increases ⁠for the rest of this year."Despite the likely acceleration in 2027 negotiated pay growth, we read this as a normalisation after a subdued 2026 rather than a new cycle," said Citi economist Giada ​Giani."Coupled with the cyclical pick-up in labour productivity growth, this should lead to further deceleration in ​unit labour costs," ⁠she added.France’s 10-year government bond yields rose 1 basis point to 4.51% after hitting 4.5531% on Tuesday for the highest level since September 2008. The yield gap versus safe-haven Bunds was at 96.50 bps after reaching 98.15 bps on Tuesday, the highest since July 2012.Concerns about ⁠the country's ​fiscal trajectory continued to weigh on its government bonds. The French government is ​due to present a budget proposal soon, a particularly delicate exercise as parties in the divided parliament harden their positions ahead of the 2027 election.Italy’s 10-year government bond ​yields rose 0.5 bps to 4.24%. The yield gap versus safe-haven Bunds was at 87 bps.reporting by Stefano Rebaudo Editing by David Goodman

precious-metals

Bond market woes likely a factor for Fed, but intervention seen as unlikely

TSX futures inch up ahead of US Fed decision

Bund yields close to 17-year highs on mixed energy prices, Fed in focus