Treasury Yields Rip Higher on Disappointing 20-Year Bond Auction

Long-term Treasury yields are soaring higher after the U.S.’ 20-year bond auction resulted in weak demand. Both the 20-year and 30-year Treasury yields are now above the key 5% level, with the 20-year yield above 5% for the first time since October 2023. The 10-year yield is at 4.589%, the highest rate since February.

Treasury Yields Rise amid Economic Uncertainty

During the auction, the Treasury Department sold $16 billion of bonds, resulting in a high yield of 5.047% compared to the expectation for 5.035% and the previous yield of 4.810%. Yields carry an inverse relationship with bond prices, with investors demanding a higher yield in light of increasing economic uncertainty. Moody’s (MCO) downgrading the U.S. credit rating to Aa1 from Aaa may have factored into the auction results.

The weak auction has also carried over to the stock market, with the S&P 500 (SPX) down by 1.27%. This is because higher yields can draw money away from equity markets.