The US Treasury sold $13 billion in 20-year bonds on July 22 at a yield of 5.163% with a bid-to-cover ratio of 2.64, close to the average of the prior ten auctions. Another sale of $16 billion drew below-expectation demand, contributing to the rise in long-end yields. By August 14, the 20-year yield had reached 5.26%, up 0.36 percentage points year-over-year. This increase reflects rising Treasury supply driven by the federal deficit and inflation expectations above the Fed’s 2% target. The market is currently testing its capacity to absorb the growing volume of long-term debt the US government needs to issue.
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