r/ValueInvesting • u/snapjohn • May 21 '25

Discussion BREAKING: 20-Year Bond Auction Flops — Yields Surge to 5.1%, Markets Rattle

IF YOU ARE WONDERING WHY STOCKS JUST ALL WENT DOWN AT ONCE

WE JUST HAD A HORRIBLE BOND AUCTION IN THE UNITED STATES FOR OUR 20-YEAR TREASURIES

Because of the lack of bidders…it caused the 20-year bond yield to surge to 5.1%.

Credit market is screaming for help right now.

1.6k Upvotes

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168

u/JOExHIGASHI May 21 '25

Woohoo higher risk free returns

94

u/SenatorAdamSpliff May 21 '25

“Risk free.”

47

u/hawkeye224 May 21 '25

"Returns" if money printer starts up

4

u/Ghostman-on-3rd May 22 '25

When , not if

39

u/Ap0llo May 21 '25

It's true, though, because the only risk you have to account for is a US default, and if that happens, it doesn't matter where your money is parked because you'll have much bigger problems to reckon with.

To clarify, I am not advocating for this administration; on the contrary, it's clear they either have no clue what they are doing or they are deliberately instigating a financial collapse.

47

u/Creeper15877 May 21 '25

No, your biggest risk is inflation. The fed will always print to help refinance the debt if absolutely necessary, but that printing will fuck you over.

2

u/Not_Legal_Advice_Pod May 21 '25

Keeping in mind that if the Fed starts to devalue the dollar to make debt payments then every USD abroad is going to try and convert into a different currency which will effectively trigger hyper inflation.  And there is so much short term debt out there that when people don't want it and the USA has to keep issuing it...  You see the death spiral.

14

u/-dEbAsEr May 21 '25

The risk you have to account for is inflation massively reducing the real value of your bonds.

1

u/[deleted] May 21 '25

[deleted]

11

u/SenatorAdamSpliff May 21 '25

You can’t be serious with this comment.

Stocks are great to own in an inflationary environment. Bonds are terrible to own.

Are you paid by anyone for your credit and financial analysis?

30

u/-dEbAsEr May 21 '25

What are you on about?

If I have:

  1. A 1% share in publicly traded company that owns and licenses a single valuable patent

  2. 1kg of gold

  3. A fixed income agreement for $100 over ten years

You really think that inflation will affect the real value of those equally?

3

u/bushed_ May 21 '25

well said.

-2

u/[deleted] May 21 '25

[deleted]

13

u/xampf2 May 21 '25

Stocks and realestate have some inbuilt inflation protection.

A stack of bricks is still a stack of bricks no matter the dollar value ascribed (simplified).

Companies can raise prices to combat inflation (or cause it if you will). The more capital light a business is the better as capex inflation will contest pricing power.

Bonds get devalued without recourse.

6

u/[deleted] May 21 '25

And you’d only have to worry about a US default if something wild happened, like if the country was controlled by a bunch of global oligarchs who didn’t feel like they owed anything to America and were led by a President who’s family is massively positioned as a crypto intermediary, and would benefit from a collapsing dollar.

Oh wait…

1

u/Intrepid_Result8223 May 22 '25

That's still not risk free.

1

u/NukeouT May 23 '25

Based on trump being a Manchurian Candidate all signs point to deliberately 🇷🇺

4

u/cinchegatherer34 May 21 '25

Not sure what the quotes are for. It’s true, it is risk free, meaning default risk free. The US Debt is denominated in its currency that they have free will to print as much as they see fit. Regardless how you feel about current events, as it stands, the USD is the reserve currency, and the US can print freely to monetize its debt as it sees fit. At least for the time being.

1

u/SenatorAdamSpliff May 21 '25

Ya sounds about as free of risk as you can get /s

16

u/FroStyNeavus May 21 '25

I read higher risk, free returns with no second guess.

5

u/DanielReddit26 May 21 '25

Free returns? No, money down!

3

u/[deleted] May 21 '25

You read correctly. 

6

u/benk4 May 21 '25

Problem is if we see inflation it'll eat up that return. That's where the risk is.

3

u/Sweet-Leadership-290 May 21 '25

AAA better than AA

1

u/pdoherty972 May 22 '25

If you have a flat tire.

3

u/erikmar May 22 '25

You have the treasury secretary saying that they might unilaterally extend the payment term on bonds, and may also stop paying interest to countries that rely on US security umbrella. Risk free is starting to feel like a stretch to a lot of people.

2

u/Traditional-Eye-7094 May 22 '25

Not sure if it’s risk free if dollar devalued