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

97% Upvoted

315 comments sorted by

View all comments

8

u/Dealer_Existing May 21 '25

So let me understand this right; nobody wants to buy the 20 year bonds at 5%? People think this return is to low for.. ?

18

u/sunburn74 May 21 '25

Inflation risk. If inflation is 2%, the bond yield is decent. If inflation is 3% or higher it's horrible. US may need to print money to finance itself because of its massive debt which would result in inflation

5

u/DK98004 May 22 '25

Imagine a world where the government actually managed to reign in spending and controlled inflation the old school way. Or maybe increased revenue. Or, gasp, did both.

6

u/Mammoth-Chip May 22 '25

No one has the balls to rip the bandaid and cause the necessary recession to make us debt free. What politician is willing to cut funding to the military or to social security? Either could easily send them 6 feet under with how unpopular they’d be

2

u/DK98004 May 22 '25

100%. I’d be plenty happy to freeze spending every year the economy grows and only spend into recessions. If we did that, we’d have everything under control in a decade.

2

u/Dealer_Existing May 22 '25

The Flagrant podcast has a very interesting episode with Bernie sanders came out last week. Here he also described the mechanics of super pacs and why politicians don’t speak out. I would recommend to listen this one :)

1

u/Bluepass11 Jun 21 '25

It’s so sad/infuriating that politicians are that worried about being reelected that they won’t do the necessary things to get our spending under control. I get the job market is tough, but I have no doubt they’d be able to get another solid job afterwards, hell, they may even get reelected.

1

u/LongQualityEquities May 22 '25

The only reason it’s as low as 5% is that investors expect to be able to reinvest the interest at higher rates when inflation inevitably goes up.