Bonds

Treasury yields fall slightly after the first auction of 20-year bonds since 1986

Treasury yields held steady on Wednesday after the first auction of 20-year bonds since the 1980s. 

Treasurys

The yield on the benchmark 10-year Treasury note fell 1 basis point to 0.693% and the yield on the 30-year Treasury bond was down slightly at 1.411%. Yields move inversely to prices.

The Treasury issued a 20-year bond for the first time in 34 years to fund a record level of borrowing the government will need to do this year to support the economy through the coronavirus pandemic. The $20 billion auction on Wednesday was met with decent demand with a yield of 1.220%.

Treasury Secretary Steven Mnuchin said with the launch of a new 20-year bond, the department is aiming to stretch the duration while locking in ultra-low interest rates.

"It is my intention to borrow a lot of money in the short term to have the funding, but then to expand our financing in 10-, 20- and 30- year bonds," Mnuchin said Tuesday during a Senate hearing. "What I'd like to do is to lock in a significant amount of very low interest rates so that the money we are borrowing can be paid back and dealt with over a long period of time."

The Federal Open Market Committee released minutes Wednesday from its most recent meeting, which cited "extraordinary amount of uncertainty and considerable risks" due to the coronavirus pandemic.

"Participants commented that, in addition to weighing heavily on economic activity in the near term, the economic effects of the pandemic created an extraordinary amount of uncertainty and considerable risks to economic activity in the medium term," the minutes said.

It has been a volatile week on Wall Street, with investors monitoring progress on a coronavirus vaccine and economic reopening efforts.

Market volatility is largely being driven by uncertainty over the likelihood of a coronavirus vaccine and concern over whether the reopening of state economies could open the door to a second wave of infections, as warned by public health experts.

Meanwhile, Republican Senators put the brakes on a $3 trillion support package passed last week by the House of Representatives, saying that they are in no hurry to work on additional fiscal support measures.