Investors demand near 5.28% yield for 20-year bonds as US deficit financing pressures borrowing costs amid a global bond selloff.
The US Treasury will auction $16 billion in 20-year bonds Wednesday, seeking to fund a $1.8 trillion budget deficit year-to-date. Investors are expected to demand a yield close to 5.28%, the highest cost for this maturity since its reintroduction six years ago.
Recent auctions have seen yields surge, with last week’s 30-year bond sale clearing at 5.216%, the highest in 25 years. Rising yields reflect weaker demand, as bond prices fall and borrowing costs climb, potentially lifting long-term mortgage rates.
Persistent deficit spending and policy uncertainty under new Fed leadership have turned routine auctions into critical market events, amplifying concerns over US debt sustainability.