US 30-year bond auction gets solid demand, even as foreign buying dips
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The news: A closely-watched USD22 billion ($33.7 billion) auction of 30-year US Treasury bonds drew solid demand, with investors accepting a 4.844% yield, which was below the level seen before the bidding deadline.
The numbers: The result pushed 30-year yields down by eight basis points and signalled that concerns about a buyers’ strike in long-term US debt may be easing.
Primary dealers, required to bid for a pro-rata share of all auctions, took down 11.4% of the supply, The Wall Street Journal noted citing BMO data. The proportion was below the 14.4% average from the previous six auctions. Foreign investors, however, bought 65.2%, which is lower than a 67.4% average, Barron's noted.
The context: Investors have been watching Washington closely, with concern mounting over President Donald Trump’s tax-and-spending bill, his administration’s tariff policies and the broader debt load fuelled by successive governments and Congress.
The auction also came amid market scrutiny following Moody’s downgrade of the US credit rating due to rising concerns about government spending.
Yields on long-term bonds globally have risen this year, as some large investors, including Pimco, have shifted to shorter maturities.
The sources: US Department of the Treasury, Bloomberg
