The recent auction of 30-year US Treasury bonds on June 12, 2025, has brought relief to US investors as it encountered surprisingly high demand. The auction comprised a volume of 22 billion US dollars and achieved a yield of 4.844 percent, slightly below the yield levels observed during trading, indicating solid demand. This led to long-term bond prices rising and the yield falling back below the level reached before the withdrawal of the top rating by Moody’s in May.
Background of the Auction
Prior to the auction, investors had expressed concerns that investors might shy away from long-term US debt securities—triggered by the high budget deficit of the US and political uncertainties such as the trade war under President Donald Trump. These factors had recently dampened investments in the US. However, the strong demand at the auction signals a robust interest in US Treasury bonds despite these challenges.
Outlook and Risks
Nevertheless, concerns about the future stability of the market remain. Rising interest rates on long-term bonds since April—peaking at over 5 percent for 30-year Treasuries at the end of May—continue to reflect uncertainty regarding the fiscal situation. Experts now regard each auction as a “risk event,” as it serves as an indicator of confidence in US national debt. Analysts also warn of a potential downward spiral (“vicious circle”) if demand continues to weaken.
Overall, a mixed picture emerges: The current auction has alleviated fears in the short term and caused a collective sigh of relief in the market; at the same time, fundamental risks due to high indebtedness and political uncertainties remain, making the recovery in the bond market fragile. Therefore, upcoming auctions will need to be closely monitored to assess whether this positive development is sustainable or only temporary.