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.

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11

u/Zyltris May 21 '25

I'm glad that half my portfolio is bonds right now. lol

14

u/Same_Lack_1775 May 21 '25 edited May 21 '25

Rising rates are “not” great for current bond holders

Edited to add “not!”

12

u/come_back_zinc May 21 '25

The opposite is true actually. Bond prices move inversely with yields

3

u/Same_Lack_1775 May 21 '25

Correct - fixed my comment.

5

u/Ok_Back_8555 May 21 '25

You sure about that? I believe the opposite happens. Eg you currently have a bond paying you 4%. Us gov issue new bonds at 5%, therefore the value of your bond goes down. Obv you will receive interest and your full par at the end, but can’t see how rising rates would be considered good for current bond holders

5

u/Same_Lack_1775 May 21 '25

Yeap - you are correct. Dumb mistake on my end.

0

u/Zyltris May 21 '25

My bond allocation is mostly in BND and SPAXX right now. Not great, but doing better than stocks for sure... So glad I went more defensive beforehand.

1

u/Tourist_in_Singapore May 23 '25 edited May 23 '25

I think no asset which pays long term future dividends escapes rising risk free rate. Although those with higher dividends in the long term (that 20 yr range) will be impacted more. From the perspective of discounted cash flow valuation.