Jul 29, 2020 - Economy & Business

Demand for Treasury notes is high despite record issuance and lower yields

A chart
Data: Investing.com; Chart: Axios Visuals

Bond investors have been snapping up U.S. government debt in recent weeks, pushing yields back toward record lows.

Driving the news: Tuesday's auction of 7-year Treasury notes continued a trend of increased bids and lower yields.

  • It followed an auction of $48 billion of 2-year notes at a high yield of 0.155%, and $49 billion of 5-year notes at a high yield of 0.288%.
  • These auctions represent both the lowest yields ever for each maturity and the largest amounts ever, according to data from BMO Capital Markets rates strategist Ben Jeffery.

Why it matters: Despite the increasing size of the Treasury issuance to deal with the growing U.S. budget deficit, investor appetite has increased, suggesting strong investors demand for safe-haven assets.

Yes, but: Declining yields may also be helping drive down the value of the dollar, which is on pace for its worst monthly performance in a decade.

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