Treasury Auction Yield Hits Highest in 25 Years

A $25 billion 30-year Treasury auction this week ended with yields at 5.216% – the highest since 2001. The auction is the latest sign of investors’ concern over Treasuries and demand for higher compensation to finance our growing national debt.

Despite the record high yield, the 30-year auction saw weaker demand than last month, with a bid-to-cover ratio of 2.39 and primary dealers absorbing 11.5% of the issuance – both pointing to weaker demand than their averages over the past 12 months. The awarded yield was reported as above the prevailing “when-issued” yield, indicating demand was weaker than expected.

Yields on the 30-year Treasury bond surpassed a 19-year record last month and are currently trending above 5.2%. Meanwhile, yields on the 10-year Treasury note have been above 4.6% for nearly the past month, or over 40 basis points above projections from the Congressional Budget Office.

Putting our debt on a downward sustainable path can help to put downward pressure on interest rates and reduce the debt upon which interest must be paid. Without action, the United States faces a potential debt spiral, which in the worst case could lead to a fiscal crisis.