Strong Demand at U.S. 10-Year Auction Eases Market Jitters as Debt Soars Past $36 Trillion
The U.S. national debt has surged past $36 trillion — now exceeding 120% of GDP — sparking growing debate over long-term fiscal stability. Yet Wednesday’s 10-year Treasury auction offered a counterpoint to concerns that investors are turning away from U.S. government bonds in favor of alternative assets like bitcoin and gold.
Despite escalating debt levels and deficit warnings, demand for the $39 billion in 10-year notes proved robust. The auction saw a bid-to-cover ratio above 2.5x, signaling healthy investor appetite, with primary dealers absorbing just 9% of the issuance — one of the lowest takedown rates on record, according to Exante Data. That suggests most of the buying came from end investors, not obligated institutions.
The notes were issued at a yield of 4.421%, reflecting both the elevated rate environment and investor willingness to hold long-duration U.S. debt despite growing macro risks.
30-Year Bond Sale in Focus
On Thursday, the Treasury is set to auction $22 billion in 30-year bonds — a sale that could offer deeper insights into how markets are digesting President Donald Trump’s ongoing fiscal agenda, including his aggressive tax cut proposals and trade war policies rolled out earlier this year.
Analysts say the strength of this long-end demand will be key to gauging whether Treasuries are still perceived as a safe haven — or whether demand is quietly shifting toward alternative stores of value.
Mounting Fiscal Pressure
The U.S. ran a $1.8 trillion deficit in 2024, and projections suggest that figure could rise by another $2.4 trillion in the years ahead, driven in part by Trump’s proposed tax reforms. Servicing the debt already costs the government roughly $1 trillion annually.
That backdrop has prompted some investors and macro strategists to highlight bitcoin and gold as increasingly viable hedges against a potential fiscal crisis, especially as concerns grow about long-term U.S. solvency and dollar debasement.
While strong Treasury demand this week has temporarily soothed market fears, questions about debt sustainability and asset diversification remain front and center for global investors.
