A $22 billion auction of 30-year bonds is expected to draw strong interest, and results are forthcoming.
by VT Markets
/
Jul 11, 2025
Factors Affecting Long Bond Demand
Even though long bonds have become less popular lately, several factors may increase demand for them. Treasury auctions are attractive as investors are focusing on economic fundamentals and monetary policies.
Bessent is hesitant to add more debt at current yields, which boosts the demand for long bonds as the refunding cycle gets closer. Historically, long bond auctions perform well when 30-year rates are above 4.80%.
The combination of the sector’s low prices and recent poor performance hints at strong potential demand. We can expect auction results shortly after the auction ends.
Market Dynamics and Implications
The next auction will test the demand for long-term government debt with yields close to 5%. This auction will add $22 billion to the existing 30-year tranche, and market observers are ready for insights into investor interest in long bonds. Yields are rising, with the benchmark 30-year rate reaching 4.888%, which usually attracts more buyers.
This rise in borrowing costs signals wider market trends. Globally, government debt is facing increasing pressure from larger deficits, higher interest payments, and trade issues that have reduced foreign investment in recent months. Additionally, rising US rates compared to other countries are making dollar-denominated securities more appealing.
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by VT Markets
Jul 11, 2025
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