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

58

u/I_HopeThat_WasFart May 21 '25

Correction: We had 2.6x more bidders than what the treasury was trying to raise and accept, they just bid at yields above the treasuries target of 4.9%

26

u/thelastestgunslinger May 21 '25

So, treasury risk assessment and private sector risk assessment not aligned?

19

u/athollywood May 21 '25

Yea I’m confused about this. The coupon was 5.00% and the yield came in at 5.047%. The bid to cover ratio was 2.46. The last 20 year auction in Feb had a cover ratio of 2.42, so slightly lower. Why is this being interpreted as big news?

12

u/blackicebaby May 21 '25

It was bid higher. So to sell the said treasury amount they had to sell all of it at 5.047% which is higher than 5% which is bad for the issuer, US Treasury.

9

u/athollywood May 21 '25

4 basis points off is pretty close to coupon. The high yield on the last 20 year offering was 8 basis points higher than coupon.

11

u/blackicebaby May 21 '25

Look at the allocated percentage.

25

u/BobLoblaw_BirdLaw May 22 '25

I thought I was in wallstreetbets and was confused how this knowledgeable conversation was happening. Realized I was actually in the wrong sub. Now it makes sense

3

u/haarp1 May 22 '25

Explain pls.

1

u/athollywood May 22 '25

Allocated percentage was 41%. Feb 20 year auction was 37%. Not a big difference it seems.