30-Year Bond Rate Falls Sharply

 At Tuesday's auction, the Treasury sold $18 billion worth of 30-year bonds. The median yield fell sharply to 3.43 percent from last month's 4.00 percent. With $40.74 billion, the T/A ratio came out to 2.26, largely on par with recent 30-year auctions. However, it is higher than historic auctions under this maturity: the oldest records consistently reported by the Treasury come with a T/A ratio around 1.7.

Overall, the T/A has been rising in recent years for 30-year bond auctions. Given the high interest rates that the Treasury has had to agree to at all auctions in recent months, it would have been good debt-management policy to put more 30-year bonds up for sale this time. The 3.43 percent at today's auction is the lowest rate since August, when a similar bond went for 3.019 percent. 

A technical note: the 30-year is sold in revolving cycles of three: the bona-fide 30-year; the 29-year, 10-month; and the 29-year, 11-month. Today's auction sold the last type. The Treasury tends to push a larger amount of debt when the 30-year proper is up for auction. However, there is no cyclical pattern following the three types of 30-year in terms of yield. This is another reason why it would have been reasonable for the Treasury to expand its debt sales today.

The yield for this maturity class closely follows the secondary market. At the time of the auction in November, the 30-year sold for approximately 4 percent in the secondary market; today, that same yield stands at 3.53 percent.  

Total U.S. debt stood at $31,317.68 billion on December 12. The estimated average interest rate is 2.15 percent. The model that provides this estimate is based on two thirds of the debt.

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We do not give investment advice. 

This blog provides analytical information solely for the purposes of 1) predicting the cost of the federal debt, and 2) for assessing the risk for a U.S. fiscal crisis. All information published here, forecasting and other, is based on publicly available data from the U.S. Treasury, including but not limited to approximately 65 percent of the current debt; on macroeconomic data, including but not limited to monetary policy decisions by the Federal Reserve; and on macroeconomic theory.