The yield on U.S. 30-year Treasury bonds has surged to its highest level since 2001. Concerns over rapidly increasing government debt and persistent inflation are driving long-term rates higher.
On August 13, the yield for a $25 billion auction of 30-year bonds was set at 5.22%, the highest since 2001. This marks an increase of 0.16 percentage points from last month’s 5.06% and a rise of 0.31 percentage points compared to the 4.91% yield just before Donald Trump took office in January of last year.
The bid-to-cover ratio was 2.39, exceeding recent averages. While demand for Treasury bonds remains steady, investors are demanding higher yields for longer-term loans.
The yield on 10-year bonds also rose. In a $42 billion auction held the day before, the yield reached 4.69%, the highest since 2007.
The increase in long-term rates is largely attributed to the rapid growth of government debt, which is nearing $40 trillion. The federal government’s debt held by the public has risen to 100.2% of GDP as of the end of the first quarter, marking the first time since the immediate post-World War II era, excluding a brief period during the COVID-19 pandemic when it exceeded 100%.
The Congressional Budget Office (CBO) projects that this ratio will rise to 108% by 2030, surpassing the previous record of 106% set after World War II.
High inflation is also a concern. The Consumer Price Index (CPI) for July rose 3.4% compared to the same month last year, significantly above the Federal Reserve's inflation target of 2%. Energy price volatility due to the Iran conflict could further exacerbate inflationary pressures.
Gennadiy Goldberg, head of U.S. interest rate strategy at TD Securities, commented, “The results of this auction show that while there is still demand for Treasuries, investors are seeking higher yields.”
* This article has been translated by AI.
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