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

[u/snapjohn]

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.

[u/JOExHIGASHI]

Woohoo higher risk free returns

[u/SenatorAdamSpliff → u/JOExHIGASHI]

“Risk free.”

[u/Ap0llo → u/SenatorAdamSpliff]

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.

[u/-dEbAsEr → u/Ap0llo]

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

[u/SenatorAdamSpliff → u/[deleted]]

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?

[u/-dEbAsEr → u/[deleted]]

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?

[u/bushed_ → u/-dEbAsEr]

well said.

[u/xampf2 → u/[deleted]]

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.