The 30-Year Bond Auction Went Poorly. Yields Are Popping Higher.

Thursday marked the third consecutive weak auction this week. (TIMOTHY A. CLARY / AFP / Getty Images)

An auction of government bonds that expire in three decades saw weak demand Thursday, in an ominous sign for the Treasury market.

The Treasury Department sold $25 billion worth of 30-year debt at a yield of 4.813%, which was more than two basis points above the yield’s level at the pre-bidding deadline. Higher rates at auctions signal that demand is weak, as the Treasury has to entice investors to buy U.S. debt. One basis point is equal to 0.01%.

Yields leapt higher in response, with the yield on the 30-year Treasury note rising to 4.829%. Earlier Thursday, the yield had been below the level it settled at on Wednesday. Higher yields means prices of Treasuries have started falling as investors feel disappointed by the results.

The Treasury’s auction of debt expiring in 10-years also saw poor demand on Wednesday. Both auctions are widely watched; 10-year debt forms the basis of rates around the world, including for mortgages and corporate debt while 30-year debt is routinely bought by pension funds and insurers.

Thursday marked the third consecutive weak auction this week: Tuesday’s auction of 3-year debt also went poorly. The 30-year bond, which will be issued on August 15 and matures in 2055, wraps up this week’s supply of key U.S. government debt.

Perhaps the most striking stat for Thursday’s auction was the participation by primary dealers, or banks and institutions that are obligated to buy up remaining debt in all Treasury auctions. This group bought 17.5% of the supply, the most since the weak August 2024 sale of 30-year debt. Primary dealers also bought a lot during Wednesday’s 10-year auction.

Other stats were poor, with the so-called indirect bidders, which include foreign central banks, taking in 59.5% of issuance of the 30-year debt, versus their average of over 61% over the last three auctions. Direct bidders, which include domestic institutions like pension funds, bought 23% of Thursday’s issuance, which was slightly lower than the average, as well.

The poor stats for Thursday’s auction shouldn’t alarm investors. Historically, 30-year debt isn’t all that sought after, given its long maturity; the market saw weak demand for 30-year debt in May, March and February.

But weak demand for all three auctions this week suggests that investors weren’t quite happy with the prices and yields on the table and saw a fair value that was higher across the board. That’s a bad outcome for the Trump administration, which is more focused about its interest costs than prior administrations.

The question now is whether future auctions mirror this week’s performance.

“If I started seeing, you know, for the course of months persistent weakness in auctions at the back end, I would know,” said Amar Reganti, a fixed-income strategist at Hartford Funds. “I would say there’s some challenges.”

This auction series of three-year, 10-year and 30-year debt repeats from Sept. 9 to Sept. 11.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com.