Long-term Treasurys rallied on Monday after a promising $16 billion auction of 20-year Treasury bonds, an event investors have generally overlooked but have started to closely monitor in recent months amid surging Treasury yields.

The highest yield on Treasurys auctioned Monday was 4.78%, 3 basis points below the 20-year bond’s yield on the secondary market before the auction closed at 1 p.m. ET. That𓆏 indicates buyers at Monday’s auction were prepared to pay a higher price than markets were expecting. 

The yield on the Treasury's 澳洲幸运5官方开奖结果体彩网:benchmark 10-year note fell about 5 basis points to about 4.41% on the auction results. The 澳洲幸运5官方开奖结果体彩网:S&P 500 index closed Monday's trading session 0.7% higher.

Less than two weeks ago, 澳洲幸运5官方开奖结果体彩网:Treasury yields spiked and U.S. stocks fell during a similar $24 billion auction of 30-year Treasury bonds. The 10-year yield rose 11 bps to 4.63% when that sale occurred on Nov. 9, while the S&P 500 Index dropped 0.8%, ending eight straight trading sessions of gains. Since then, bond yields have declined and the 澳洲幸运5官方开奖结果体彩网:S&P 500 has surged 4.6%.

U.S. Debt, Interest C🍃osts Sharpen Focus♐ on Auctions

The U.S. Treasury conducts bond auctions routinely as a means of financing new debt and refinancing its existing obligations. For years, such auctions have garnered relatively little financial market interest.

That has changed in 2023, though.

The 澳洲幸运5官方开奖结果体彩网:Federal Reserve's recent interest rate hikes to curb inflation have sent🐻 the benchmark 10-year yield to its highes൲t level since 2007.

Meanwhile, Congress has struggled to address fiscal matters amid showdowns over the U.S. 澳洲幸运5官方开奖结果体彩网:debt ceiling and the 2024 fiscal budget as the U.S. budget deficit has doubled to $2 trillion.

The rising deficit requires the issuance of additional Treasury debt to fund it. At the same time, 澳洲幸运5官方开奖结果体彩网:interest costs on existing debt have increased considerably, cour꧂tesy of the Fe༒d's rate hikes.

The Treasury's net interest costs reached $659 billion in the fiscal year ended Sept. 30, up 39% from the prior fiscal year. Its interest costs have almost doubled in the past three years and now represent the federal government's fourth-largest financial outlay behind 澳洲幸运5官方开奖结果体彩网:Social Security, Medicare, and national defense.