Wednesday’s auction of 10-year U.S. Treasury notes undermined the narrative that investors are moving away from U.S. government debt, the bedrock of global finance, and pouring money instead into bitcoin
and gold.
Thursday’s sale of $22 billion of 30-year bonds may provide further clues to investor confidence in the fiscal policies of U.S. President Donald Trump since he initiated the global trade war in early April and help signal whether the notes are losing their shine as the premier fixed-income instrument backed by the deepest liquidity and low credit risk.
At the June 11 auction, demand for the $39 billion of 10-year notes, which offered a yield of 4.421%, outstripped supply by more than 2.5 times, according to Exante Data, and the primary dealer takedown was reportedly just 9%, the fourth-lowest on record. That’s a sign investors did most of the heavy buying. Primary dealers are the institutions authorized by the central bank to trade government bonds, and the takedown refers to the amount of newly issued debt they absorb themselves.
Worsening debt situation
As of June, the U.S. total gross national debt is over $36 trillion, more than 120% of the country’s gross domestic product (GDP).
The deficit, or the excess of government expenditure over revenue, was $1.8 trillion in 2024. The figure is expected to increase by $2.4 trillion in the coming years due to Trump’s tax cut plans. As of now, the U.S. pays $1 trillion as the cost of servicing the debt.
The new issuance, therefore, is more likely to exacerbate the problem and has several analysts pointing to bitcoin and gold as a hedge against the fiscal crisis.
