US sells 30-year bonds at highest borrowing costs since 2001

I can't even begin to imagine how someone says this with a straight face.

https://www.atlanticcouncil.org/blogs/econographics/are-risi...

> Several factors have driven the rise in bond yields, including higher inflation expectations amid elevated energy prices following the Iran war and uncertainty surrounding a new Federal Reserve Chair. But the more fundamental concern is the US fiscal position: persistently high budget deficits have reached 6 percent of GDP, while government debt now exceeds the size of the US economy.

> In Fiscal Year 2026, which ends in September, the US Treasury is expected to issue around $2 trillion of securities on a net basis. Gross issuance, meanwhile, could reach a staggering $20 trillion according to the Securities Industry and Financial Markets Association. That gap reflects the sheer volume of debt that needs to be rolled over, much of it resulting from the Treasury’s decision under former Secretary Janet Yellen to favor shorter maturities when rates were lower and curves were upward sloping.

> US Treasury Secretary Scott Bessent has been attentive to the resulting borrowing costs and their impact on the budget deficit, which is why the Treasury has sought to limit pressure on the US bond market from foreign central banks that need dollars. During a recent joint FX market intervention with Japan, the Treasury sold euros for yen rather than dollars, avoiding transactions that would have required selling Treasuries. It has also asked the Fed to raise the limit on its Foreign and International Monetary Authorities repo facility, allowing the Bank of Japan and other foreign central banks to borrow short-term dollars against Treasuries rather than sell them in the open market, which could put further upward pressure on yields.

https://www.bloomberg.com/news/articles/2026-08-13/us-braces...

> “Investors are being asked to absorb a growing supply of government debt globally at a time when deficits remain large, inflation uncertainty persists” and the Federal Reserve is no longer a major buyer, said Michal Stanczyk, portfolio manager for the global fixed income team at Allspring Global Investments.

> “If investors continue demanding greater compensation for inflation and fiscal risks, long-term yields could move higher and away from 5% even if Treasury auctions remain well covered,” he said.

Risk premium!

The treasury announces it wants to sell $ 25B of 30Y bonds.

Then investors submit offers saying in effect how much yield they demand to buy them.

Then the treasury fills bids from the lowest yield upwards in tranches.

At the same time, it spells out the limits of seeing the world in terms of weapon effect: an American population brutalized by twenty years of occupation; Israel binding tight alliance with Saud; a resurgent heretic Shia power; a meteoric rise of China - historically far more of a foe to Islam than the West. None of these are what you might call brilliant for Bin Laden's ultimate goals.

When we fire a gun we don't know what that bullet does twenty years from now.

None of these big swings between administrations had much to do with policy:

Clinton inherited the end of the Cold War and resulting “peace dividend”.

Obama inherited a Federal government already spending hundreds of billions to address the GFC.

Similarly, Biden inherited a Covid recovery budget spending an additional trillion or so.

The last pre-Covid Trump I year of 2019 had a $984B deficit. After Covid, Biden’s final full year deficit was $1.83T.

There’s a non-zero correlation between any number of policy choices by both parties and the GFC or Covid, but it’s hard to see these primarily as anything but exogenous shocks.