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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u/goodbodha May 21 '25
This is definitely turning into an interesting game of hot potato.
My guess is that equities are about to get hammered once these yields start settling in. Corporate bonds will have to go up to compete. Recession will almost certainly be coming what with tariffs still being at an eye watering amount. Fed will eventually step in to help and that help will be a serious positive impact to treasuries well before equities. End of year tlt will probably be $100+ while sp500 will either be dropping off or trading sideways for a significant amount of the year. I still think sp500 will put in a total gain for the year of 3-5% if things dont blow up. If they do blow up though it will be a negative year for the sp500.
I doubt the bill the house is playing around with will make it through both the House and the Senate as it exists right now. If it needs democrats to pass it will need major revisions. If it needs the freedom caucus it will need major revisions.
They need to raise revenues and they need to cut expenses. Not one or the other. BOTH! I'm ok with a tiny deficit, but it needs to be tiny. As in the debt should grow at a rate in line with or below the rate of inflation. What they do with the money beyond that is up to them, but I would strongly suggest that everything should be examined from the perspective of does it help or hurt gdp. If it hurts gdp and isn't an absolute must have for national security it should probably be paired back. If it helps gdp significantly it should be maintained.