By The Epoch Times | Created at 2026-10-08 22:29:08 | Updated at 2026-10-10 01:01:12
1 day ago
The 30-year Treasury bond yield slipped following another day of strong investment demand for U.S. debt.
On Oct. 8, the department staged a $22 billion auction for 30-year government bonds, resulting in a yield of 5.618 percent.
The issuance was solid, with foreign investors—central banks, international banks, and sovereign wealth funds—accounting for a majority of purchases. They bought about 72 percent of the supply. This was in line with the 10-year auction average.
Direct bidders—institutional and non-institutional U.S. investors—took on approximately 21 percent of what was available, slightly above the decade average of 18.3 percent.
Primary dealers—major banks and hedge funds—scooped up 7 percent of Treasury securities, below the 9 percent average.
The 30-year yield shaved off almost 6 basis points to less than 5.61 percent. It had been trading as high as 5.73 percent prior to the auction, the highest since early 2002.
This marked the third Treasury sale this week.
On Oct. 6, the Treasury held a $58 billion auction for three-year notes, attracting solid demand driven by foreign investors.
A highly anticipated $39 billion sale of 10-year government bonds followed a day later, drawing strong foreign demand but also the highest yield this century.
Buybacks Back in Spotlight
In addition to debt sales, the Treasury also completed a $6 billion buyback operation to repurchase 20- and 30-year bonds on Oct. 8.
The department has routinely repurchased long-dated government debt to pressure yields this year and then issue short-term securities. Buybacks kicked into high gear this past summer when Treasury Secretary Scott Bessent announced operations would be as much as $6 billion to stabilize the bond market.
Market watchers are skeptical that the current administration can successfully reverse long-term yields, and it could be risky.
“The Treasury buyback program is another risk,” Dat Tong, senior financial markets strategist at Exness, said in a note emailed to The Epoch Times.
“Previous operations have done little to prevent longer-dated yields from rising, but larger interventions could still influence direction at the long end of the curve.”
When the Treasury announced it would double and triple buybacks, the 30-year yield was around 5.2 percent. It has since risen about 40 basis points.
The global government bond market has been upended since the start of the war in Iran almost nine months ago, as investors price in higher inflation due to the oil price shock.
Still, the sharp jump in yields is about real rates—the nominal Treasury yield minus expected inflation—say Franklin Templeton strategists.
“Over the past month, the 10-year Treasury yield has risen about 45 basis points (bps),” they said in an Oct. 8 note. “Just 1 bp of that increase reflects higher long-term inflation expectations, while roughly 44 basis points of the increase reflects higher real yields.”
They estimate that about 98 percent of the surge results from higher real rates.
Meanwhile, what the Federal Reserve will do next also drew attention from financial markets.
Appearing at a Central Bank of Turkey forum in Istanbul on Oct. 8, Fed Governor Christopher Waller suggested that further policy tightening could be in order to bring inflation back down to the institution’s 2 percent target after missing it for more than five straight years.
While he thinks more rate hikes are needed, Waller said, “There is some flexibility about when those hikes will occur.”
“The hikes do not need to come at consecutive meetings, but they should be in place in an acceptable period of time,” Waller said.
His remarks come one day after minutes from the September meeting indicate officials expect at least one rate hike before the year is finished.
Investors are pricing in an 81 percent chance that the Fed will leave interest rates unchanged at the October policy meeting later this month, according to CME FedWatch Tool data. Traders have penciled in 70 percent odds of a quarter-point rate hike.
