30-year U.S. Treasury bond auction yields break 5%, for the first time in 20 years.

The U.S. Treasury Department successfully completed a $25 billion auction of 30-year Treasury bonds on Wednesday, with the winning bid rate reported at 5.046%, the first time it has broken through the 5% threshold since August 2007. According to the Treasury's regulations, the winning bid rate falls within the range of 5% to 5.124%, corresponding to a bond coupon rate of 5% - this means that this is the first time the Treasury has officially issued 30-year Treasury bonds at a financing cost of 5% since 2007. The last time a 5% coupon 30-year Treasury bond was issued, it coincided with the eve of the global financial crisis.

The results of this auction were notably weaker. The winning bid rate was above the pre-auction secondary market pre-issuance rate of 5.041%, forming a so-called "tail" - that is, the sale can only be completed at a higher rate than market expectations, which is generally seen as a sign of weak demand. So far, the Treasury has had two consecutive "tails" in the auction of 30-year Treasury bonds. The subscription multiple has dropped to 2.303, the lowest since November 2025, and below the average of 2.43 in the last six auctions. Primary dealers (i.e., major Wall Street banks) were forced to cover 11.7% of the issuance, about twice the record low set in February of this year - this usually means that there are not enough real buyers in the market, and large banks have to take them hard.

The internal structure data shows a slight highlight. The proportion allocated to indirect bidders such as overseas central banks has rebounded to 66.6%, higher than 64.1% in April, slightly lower than the recent average of 66.8%, indicating that overseas demand has not retreated significantly.

This auction continues the overall bearish situation in the issuance of U.S. Treasury bonds this week. The auctions of three-year and ten-year Treasury bonds have both encountered less than expected demand, and the soaring volatility in the bond market has made buyers generally wait and see. The core logic behind the upward movement of long-term interest rates is that the escalation of the Middle East situation has driven up oil prices, and inflation expectations have re-emerged, coupled with the continuous expansion of the U.S. fiscal deficit and the expansion of long-term financing needs. Investors are demanding higher term premiums in order to hold super-long U.S. Treasury bonds.

It should be noted that the yield on 30-year U.S. Treasury bonds briefly exceeded 5% during the aggressive tightening period of the Federal Reserve in October 2023, but at that time, the Treasury had not yet officially issued bonds at a cost of 5%. What is different this time is that 5% has become the actual financing cost of the government, implying that the U.S. debt interest burden will further increase.

Deutsche Bank's interest rate strategist Steven Zeng said that a 5% yield level usually attracts long-term capital driven by liabilities, such as pensions. However, he also warned that this logic is based on the premise that inflation will not force the Federal Reserve to restart rate hikes. "If high oil prices cause inflation expectations to lose anchor, the market will have to re-evaluate the path of the Federal Reserve, and yields may rise sharply at that time." Currently, the market's probability expectation for a 25 basis point rate hike within the year has risen to 50%.

The yield on 30-year U.S. Treasury bonds is one of the most important long-term interest rate anchors in the global financial market. Its continued rise means that corporate financing costs will increase, mortgage interest rates will be under pressure, and the valuation of growth stocks will narrow. Global financial conditions will further tighten. The current core divergence in the market is whether 5% is sufficient to attract long-term capital to enter the market, or whether, under the dual suppression of fiscal deficits and inflation risks, the