US Treasury sells $25 bn of 30-year bonds at highest yield since 2001
The Treasury’s $25 billion 30-year bond auction posted a 5.216% yield, the steepest since 2001, as investors demand higher compensation for inflation and fiscal risks.
The U.S. Treasury sold $25 billion of 30-year Treasury bonds on Thursday at a 5.216% yield, the highest level for that maturity since 2001. Demand was solid but modest, with a bid-to-cover ratio of 2.39, close to the average of recent auctions.
Allspring Global Investments portfolio manager Michal Stanczyk said investors are facing a growing supply of government debt while deficits remain large and inflation uncertainty persists. He warned that continued demand for higher compensation could push long-term yields above 5% even if Treasury auctions stay well covered.
TD Securities’ head of U.S. interest-rate strategy Gennadiy Goldberg noted that strong supply absorption this week indicates demand exists, but it comes at a higher price.
The auction follows a 10-year Treasury sale the day before that recorded the highest financing cost for that tenor since 2007. Treasury officials have not responded to requests for comment.
Long-term yields have risen above 5% this year amid concerns that higher energy prices and persistent fiscal deficits could keep the Federal Reserve’s policy rate elevated for an extended period. The higher yields are also reflected in mortgage markets, with the average 30-year fixed mortgage rate reaching 6.69%, the highest level since July 2025.
Fitch Ratings maintained its AA+ rating on the United States but cautioned that the fiscal deficit could widen in 2026 due to tax cuts and tariff rebates.
Barclays analysts wrote that as the market relies more on price-sensitive investors, the same amount of Treasury supply may require larger yield concessions to clear.
Vanguard’s head of fixed-income client portfolio management Matt Wrzesniewsky said the elevated yields provide investors with “another bite at the apple,” but the firm prefers middle-maturity securities over the 30-year bond.
The Treasury recently adjusted its quarterly borrowing policy, shifting language from evaluating “increases” in long-bond sales to considering “changes.” Market participants interpret this as a possible reduction in future long-bond issuance, with a likely focus on shorter-maturity notes.
John Fath, managing partner at BTG Pactual Asset Management, argued that the only clear solution is tighter government budgeting, warning that relying on front-end issuance alone is unsustainable.