The 20-year US Treasury yield fell roughly 10 basis points ahead of a massive auction that promises to be a major stress test for the government’s borrowing capacity. The United States is preparing to sell approximately $16 billion in long-dated debt on August 19, with yields hovering around 5.27% to 5.28%, a record level since the bond’s reintroduction in May 2020. This auction comes against a backdrop of tight fiscal conditions, as the Treasury relaunched these issuances to fund massive deficits after suspending them in 1986. Bond market participants will closely watch the bid-to-cover ratio and the spread between the final yield and the when-issued yield to gauge the strength of investor demand.
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