News Digest: Bonds Rebound as Recession Anxieties Ease
June 13, 2025
Wall Street’s anxiety over ballooning US deficits eased, at least temporarily, on Thursday as a key Treasury auction for 30-year bonds saw robust demand, signaling that investors remain willing to lend to the US government despite mounting fiscal pressures. The Treasury sold $22 billion worth of 30-year securities at a yield of about 4.84%, with prices rising and yields falling as investors snapped up the long-dated debt. This outcome offered a much-needed confidence boost to markets that had grown increasingly uneasy about America’s fiscal trajectory, especially with President Donald Trump’s latest tax-and-spending proposals expected to widen the federal deficit further.
The auction’s success was driven in part by strong foreign investor participation, which accounted for roughly 65.2% of the bonds sold, up from 58.9% at the previous month’s auction and near the one-year average. This robust appetite from overseas buyers helped allay fears that international investors might be shunning US Treasuries due to concerns about rising deficits, political gridlock, and recent credit rating downgrades.
The auction came amid heightened scrutiny of US fiscal policy, with Trump’s proposed bill projected to add trillions to the national debt over the next decade. Earlier in May, Moody’s downgraded the US credit rating from Aaa to Aa1, citing unsustainable deficits and rising interest costs: a move that rattled markets and pushed 30-year yields above 5% after a poorly received 20-year bond auction. Yet, the recent results suggested that, for now, investors are willing to look past these concerns and continue treating long-term Treasuries as a haven asset.
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