US Bond Yields Under Pressure Following Strong 30-Year Bond Auction

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  • US bond yields have been under pressure and the yield curve has flattened recently after a strong 30-year bond auction.
  • If bond yields continue to decline, this could hurt the USD and help precious metals.

US bond yields have been under pressure and the yield curve has flattened recently after a strong 30-year bond auction. The US government sold $ 24 billion of new 30-year government bonds and the auction stopped at 1.4 basis points (i.e. investors were willing to accept the new 30-year bonds with a yield of 1.4 basis points lower than the current market rate at the beginning of the auction).

US 30-year yields are down 6.3 basis points on the day (to 1,823%), while 10-year bonds are down 5.3 basis points to 1,085%, a drop of almost 10 basis points from the highs reached in the middle of the trading session on Tuesday. Real returns are also moving lower, with the 10-year TIPS yield down about 3 basis points.

This comes after an equally strong auction of US 10-year government bonds on Tuesday that also caused a drop in US bond yields. Tuesday’s drop in US bond yields resulted in a drop in the US dollar, as investors sold the coin in favor of other higher-yielding currencies.

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