Treasury Yields Spike to Multi-Decade Highs Amid Weakening Demand
The US Treasury's auction of five-year notes yielded its highest return since June 2006, reaching 5.033%. This marks a weakening demand for government debt amidst elevated yields across the board.
Rising yields increase borrowing costs and tend to pressure stocks, bonds, and other risk assets as investors seek more compensation for holding debt.
The bid-to-cover ratio fell to its lowest since December 2018 at 2.212, indicating fewer bids than notes sold.
Indirect bidders, including foreign central banks, took the lowest share of the sale at 54.3% since March 2020.
Yields are rising across the curve, with the 10-year Treasury yield reaching its highest level since 2007 at 5.12% and the 30-year touching 5.37%.
Federal Reserve Governor Michael Barr emphasized that further rate hikes are necessary to combat inflation, pushing traders to increase the odds of an October hike to 70%.
Business activity accelerated at its fastest pace since July 2021, adding pressure on yields and causing Bitcoin (BTC) to fall below $84,000 after it was already under pressure from a separate hot data print that pushed the 10-year yield above 5%.