Comment on 20-Year Treasury Auction Goes Badly, Yields Spike as Bonds Sell Off

themeatbridge@lemmy.world ⁨2⁩ ⁨weeks⁩ ago

• can@sh.itjust.works ⁨2⁩ ⁨weeks⁩ ago

  Working on an archive link but for now

  The Treasury Department sold $16 billion of newly issued 20-year bonds at 1 p.m. Eastern. It’s routine for the Treasury Department to borrow to fund the government. This auction, however, saw heightened interest as investors worried that increased uncertainty about the U.S. economic policies would lead to less demand for the Treasuries. Their fears were spot on.

  The auction saw investors accept a yield of 5.047% on the 20-year note, compared with the past six auctions’ average of 4.613%. It was also 0.011 percentage points higher than the yield seen before the bidding deadline. This was the first time the Treasury sold a 20-year note with a rate over 5% since October 2023. Back in the pandemic, it could sell its 20-year debt at 1.22%. Higher rates signal that demand is weak, as the Treasury has to entice investors with higher yields to buy U.S. debt. […] The poor auction comes at a troubling time. Bond investors’ fiscal worries have intensified as a Republican Congress progresses toward a new tax bill that could add $3.3 trillion to the national debt through 2034. More debt can threaten a government’s ability to pay it all back—even though the U.S. has a pristine track record.

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