US treasury yields rose on Wednesday after weak demand for a $16bn 20-year treasury auction.
The yield on 30-year treasuries touched 5.1% following the auction, which followed Moody’s downgrade of the US’s credit rating, with the rating agency citing concerns over the country’s mounting debt pile.
The sale also came ahead of a vote on the Trump administration’s tax and spending bill, which is likely to add trillions to the nation’s $36.2trn debt. The bill was passed in the US House of Representatives today (22 May).
See also: What does Moody’s downgrade mean for bond investors?
“Bond investors are far from impressed by the proposals which would extend Trump’s 2017 tax cuts and boost military spending but cut welfare payments,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“The congressional Budget Office has forecast the proposals would add $3.8trn to the US’s $36.2trn debt mountain over the next decade.
“An auction of 20-year Treasuries saw very weak demand, indicating the wariness about White House policy.”
This story was written by our sister title, Portfolio Adviser
