US Treasury 20-Year Bond Auction Settles at 5.163% Yield Amid Weak Demand

The US Treasury auctioned $13 billion of 20-year bonds on the afternoon of the 22nd (local time), with the yield settling at 5.163%, according to the Treasury Department's announcement. The yield rose 23.6 basis points from the previous month's 4.927%, reflecting weak demand inflow. The 20-year bond, reintroduced in May 2020 after being discontinued in 1986, remains the least popular and least traded among coupon bonds in the US Treasury market.

US Treasury 20-Year Bond Auction Settles at 5.163% Yield

The reopening auction yield of 5.163% marks the highest level since October 2023 (5.245%) and the second-highest since the bond's May 2020 reintroduction. The bid-to-cover ratio fell to 2.64x from the previous month's 2.75x, also below the six-auction average of 2.74x for previous reopening auctions.

The settlement yield exceeded the when-issued trading yield by 0.5 basis points, indicating the auction cleared at a higher rate than market expectations. Indirect bidders, representing foreign investor demand, accounted for 69.1% of allocations, down 2.5 percentage points from the previous month. Direct bidders captured 16.2%, declining 3.7 percentage points.

Primary dealers absorbed 14.7% of unsold inventory, up from 8.5% the previous month and marking the highest level since last February.

Secondary Market Reaction to Auction Results

In the secondary market for US Treasuries, the 20-year bond yield expanded its gains slightly after the auction results were released shortly after 1 PM New York time on the 22nd.

FAQ

What yield did the US Treasury 20-year bond auction settle at on the 22nd?

The US Treasury 20-year bond auction settled at a yield of 5.163% on the afternoon of the 22nd (local time), according to the Treasury Department. This represents an increase of 23.6 basis points from the previous month's yield of 4.927%.

How did demand perform in the 20-year Treasury bond auction?

Demand was weak, with the bid-to-cover ratio falling to 2.64x from 2.75x the previous month. Indirect bidders accounted for 69.1% (down 2.5 percentage points), direct bidders 16.2% (down 3.7 percentage points), and primary dealers absorbed 14.7% of unsold inventory, up from 8.5% and the highest since last February.

Why is the 20-year Treasury bond considered less popular?

The 20-year bond, which was discontinued in 1986 and reintroduced in May 2020 during the pandemic, is the least popular and least traded among coupon bonds in the US Treasury market, according to the source article.