The recent decline (mainly in US stocks) is due to the recently concluded 20-year US Treasury auction being very unsatisfactory, reflecting a decrease in market demand for medium- to long-term US Treasuries, rising interest rates, and an increase in the proportion of primary dealers passively taking on bonds.

In order for the US government to successfully issue bonds, it has to pay higher interest (i.e., a higher winning rate) to attract buyers. This indicates a weakening in market demand for medium- to long-term bonds or an upward adjustment in pricing for future interest rate risks (such as inflation and fiscal spending).

Overall purchasing willingness has weakened, driving the yield on 20-year US Treasuries to rise to 5.104%, the highest since November 2023.

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