US Treasury Auction Set to Test Market Sentiment Amid Waning Demand for Long-Term Debt

The US Treasury is set to sell $22 billion of 30-year government bonds, with investors closely watching due to a decline in demand for long-term US debt. The auction will be seen as a test of market sentiment amid concerns over high debt and deficits. Higher yields mean funding pressure at a time when the US is borrowing more, with the House-passed tax-and-spending bill forecast to add trillions to US budget deficits. Foreign participation and auction details will also be scrutinized.

The US Treasury is set to sell $22 billion of 30-year government bonds on Thursday, June 9, 2025, amidst a decline in investor demand for long-term US debt. This routine auction is being closely watched by investors and financial professionals as a crucial test of market sentiment [1].

The recent rise in yields on long-term global debt has led to a souring of investor appetite for 30-year US debt. Yields on US 30-year bonds have soared to near two-decade highs, with the yield touching 5.15% in May and currently standing at 4.94% [1]. This increase in yields means that funding pressure is higher at a time when the US is borrowing more, and government spending remains rampant.

The House-passed version of President Donald Trump’s tax-and-spending bill is forecast to add trillions to US budget deficits in the years ahead. Moody’s Ratings has lowered its credit score on the US, further exacerbating concerns over the fiscal situation [1].

The auction results will provide an instant readout on the scope of market demand. Key details such as the auction “tail” and the extent to which orders exceed the amount of debt for sale will be closely monitored. Foreign participation will also be in the spotlight, as foreign investors have been reducing their holdings of US Treasuries over the past two decades [2].

While some investors, such as Jack McIntyre at Brandywine Global Investment Management, see the current situation as a test of market sentiment, others like Fred Hoffman at Rutgers Business School believe that the issue is more structural. Hoffman expects that the auction results and subsequent auctions will provide clues about demand and the extent of the problem [1].

Despite the concerns, some investors, such as Greg Peters at PGIM Fixed Income, see the current yields as attractive and are considering buying 30-year bonds. However, the outlook for long-term bonds remains uncertain, with elevated yields expected to persist for the foreseeable future [1].

The auction calendar for the week includes other significant events, such as the sale of $58 billion of three-year notes on Tuesday and $39 billion of 10-year debt on Wednesday. Economic data releases, including measures on the pace of price gains in May and inflation expectations, will also impact the market [1].

In conclusion, the upcoming 30-year bond auction will be a critical test of market sentiment and investor demand for long-term US debt. The results will provide valuable insights into the current state of the market and the outlook for future auctions.

References:
[1] https://www.bloomberg.com/news/articles/2025-06-08/-most-unloved-bonds-turn-routine-us-auction-into-crucial-test
[2] https://www.ssga.com/us/en/institutional/insights/are-foreign-investors-really-dumping-us-treasury-bonds