Weak Demand Raises 30-Year Treasury Yield
Long-Term Government Lending
Globally, 30-year bond yields are breaking into record territory. The U.S 30-year just reached 5%, and the UK has hit the highest 30-year yield since 1997. This signals that all around the world, investors are more reluctant to lend government money in the long term.
There are several possible explanations for investors weak demand during the U.S Treasury bond auction.
Growing Supply of Treasuries
Inflation and Uncertain Rate Cuts
The One Beautiful Bill Act
The U.S debt has grown to $35.46 trillion adjusted for inflation. This is over 100% of our GDP, which was surpassed in 2013. As of April 2025, it cost the U.S $684B to maintain the debt, which is 16% of total fiscal spending. Due to this, the U.S. government is running on major deficits and issuing more debt to fund spending.
While inflation has cooled from its peak and started to come down, it is still sticky. This means that prices across the country have remained high despite economic responses. Additionally, it is hard to predict when or how quickly the Fed will cut rates.
This new budget reconciliation was passed by the U.S House of Representatives with a narrow 215-214 vote. This bill contains various key provisions. Some include tax reforms such as the elimination of taxes on tips, implementing stricter work requirements for Medicaid, increasing spending for defense systems and border enforcement, and imposing taxes on university endowments. The Congressional Budget Office estimates that the bill would add approximately $2.5 trillion to the primary deficit over the next decade, with total debt increasing to $3.1 trillion, accounting for interest.
Overall, these factors contribute to investor uncertainty in our government and demonstrate its immediate need for more funding. A weak auction during a period of high debt growth, persistent inflation, and aggressive spending signals that long-term lenders are demanding more compensation for the risk they take on. As the 30-year yield surpasses 5%, the message from the global bond markets is clear: the era of cheap government borrowing is ending.