Treasury yields jump as auction of 20-year bonds to test Wall Street’s appetite for more US debt – DIGIWIZ CENTRAL

Treasury yields jump as auction of 20-year bonds to test Wall Street’s appetite for more US debt

A US Treasury payment check.

Douglas Sacha/Getty Images

Treasury yields hit fresh 16-year highs on Wednesday, continuing a massive bond sell-off.
Long-dated bonds saw big moves, with the 10-year rate topping 4.9% and the 30-year rate surpassing 5%
The latest swings in the bond market come as Wednesday’s 20-year auction tests demand for US debt.

Treasury yields climbed to fresh 16-year highs on Wednesday, ahead of another bond auction that will test Wall Street’s demand for US debt.

Long-dated bonds in particular saw big moves, with the 30-year rate breaking through the 5% threshold, while the 10-year rate jumped above 4.9%. 

Wednesday’s yield surge added to a jump Tuesday, when strong retail sales data suggested the US economy remains robust and may require more tightening from the Federal Reserve.

Meanwhile, the immense supply of new Treasury bonds hitting the market as federal deficits explode has raised questions about Wall Street’s willingness to keep buying amid a historic sell-off.

Investors will be looking towards the results of Wednesday’s $13 billion auction of 20-year Treasurys for a clue as to the severity of the current market rout, as weak demand could spark a deeper sell-off.

Previous auctions have already shown significant levels of buyer disinterest, forcing dealers to have to buy up an abnormally large amount of Treasurys on offer.

Investors have largely been stepping away from long-duration bonds out of uncertainty about the future economy and monetary policy, while concerns about growing federal deficits and US debt are pushing up term premium.

Wednesday’s rise in yields is in line with earlier forecasts, with key commentators such as Larry Fink and Bill Ackman expecting Treasurys to soon trade above 5% levels.

Read the original article on Business Insider
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