Investors wary of Treasury’s 30-year bond auction after recent disappointments

Written by Gertrude Chavez-Widivos

New York (Reuters) – Investors are close to selling $ 22 billion in US Treasury in 30 -year bonds on Thursday after an anxious auction last month, which had some of the weakest demand standards in 2025, although some believe that it might be different this time.

Analysts said that the auction volume is smaller than 3 billion dollars than that in August and it may be easier to absorb, which may be a feature.

However, the sale of 30 -year -old bonds comes amid global contempt for the long end of the return curve, as concerns about the financial deficit, an old issue, continue to grip the sovereign debt markets.

The US Treasury Market – which is widely considered to be the cornerstone of the global financial system – is under pressure amid increasing concerns about high national debts, the inflationary impact of definitions and increased satisfaction with the independence of the Federal Reserve.

“The long tip is a single part, especially 30 years, as any problem arises, the investor’s reaction in the knee was to sell it,” said Gonuet Dingra, head of the US price strategy at BNP Paribas in New York.

“This dynamic, in addition to the fact that the long long bond markets from Japan to the United Kingdom will flash the amber or red, will maintain the long end of the United States curve under pressure.”

At an auction last month, the proportion of the offer to the cover, a measure of invested demand, was 2.27, which is the lowest level since November 2023.

The ultimate user request, which combines both indirect and direct bids, decreased to 82.5 %, which is the worst since August 2024. Executive offers in Treasury auctions are companies, such as pension funds and hedge funds, who offer offers for their investment accounts directly to the US Treasury Department.

On the other hand, they are the offspring offers, they are investors who offer competitive offers through an intermediary, such as a basic merchant or financial institution. These offers also include foreign investors.

However, August is usually “seasonal negative” for a 30 -year -old width, said Phil Hartmann, the US prices strategy at BMO Capital. Since 2009, he indicated that a 30 -year bond auction in August managed to go smoothly and that was in 2014.

In general, the debts of the US government, which has long been in the face of the opposite winds, continued with the return curve for five years/30 years to 126 basis points last Friday-its widest level for more than four years. The move indicated a continuous pressure pressure on 30 -year bonds, which leads to an increase in investor revenues in re -evaluating expectations for long -term prices.

The curve slightly settled this week, as investors reduced their decline before the 30 -year auction.