U.S. set to pay most for 30-year debt in quarter of a century

Key Points:

• The U.S. Treasury plans to auction $25 billion of 30-year debt, with the new bond's projected yield at about 5.23%, marking the highest borrowing cost since 2001 amid rising long-term yields and economic concerns.
• Elevated government financing costs are pressuring the broader economy ahead of the midterm elections, driven by inflation, government spending, and increased Treasury supply from fiscal deficits.
• Investor demand for long-term bonds remains cautious despite multi-decade high yields, with Treasury officials considering potential changes to long bond sales and possibly focusing more on shorter-maturity notes to manage costs.
• Inflation easing signs have slightly lowered yields recently, but interest on public debt continues to significantly contribute to the budget deficit, which has grown 15% this fiscal year due to higher yields.
• Analysts emphasize that without tightening the federal budget, efforts to reduce long-term borrowing costs through issuance adjustments may be limited and potentially irresponsible.