30-Year Treasury Yield Hits Highest Since 2001 as $742B Auction Cycle Ends

The U.S. Treasury sold $742 billion in securities this week across nine auctions, a heavy supply that pushed long-term yields to multi-decade highs. The 30-year bond auction on Thursday cleared at a yield of 5.216%, the highest since August 2001. The 10-year note auction on Wednesday yielded 4.68%, the highest since August 2007.

In the secondary market, the 30-year yield closed at 5.26% on Friday after touching 5.28% earlier in the week. The 10-year yield settled at 4.70%, recovering from a brief dip after the CPI release. The yields reflect growing anxiety among bond buyers about inflation, fiscal deficits, and the Federal Reserve's willingness to act.

The auction results mark a continuation of the bond bear market that began in 2020. Buyers of 30-year bonds at auction that year, when yields were below 1.5%, have suffered severe losses. The bond issued in August 2020 with a 1.38% coupon now trades at roughly 46 cents on the dollar, a 54% decline from face value. New buyers at that price lock in a yield to maturity of 5.39%.

Long-Term Auction Results

The 30-year bond auction attracted demand, but the high yield was necessary to clear the $22 billion offering. The Treasury also sold $58 billion in 10-year notes and $77 billion in 3-year notes. Total long-term issuance for the week came to $157 billion. The 30-year yield at auction was the highest since the Treasury suspended sales of the long bond in 2001, reintroducing it in 2005. Adjusted for that gap, the yield would rank as the highest since at least 2004.