Market Extra: Fed is biggest loser on 30-year bonds trading at less than 50 cents on the dollar

by | Oct 5, 2023 | Stock Market

The 30-year bond, one of the safest securities the Treasury market has to offer, is getting crushed via a selloff over the past two weeks that’s drawn comparisons to the losses seen in U.S. equities during the dot-com bust and the 2007-2009 financial crisis.Long bonds issued in May and August of 2020, which mature in 2050, traded at 45 cents and 47 cents on the dollar as of late Thursday afternoon. The Federal Reserve is their biggest holder, with 18.8% of all the outstanding 30-year bonds issued on May 15, 2020, and 24% of those issued in mid-August of the same year, according to Bloomberg data. The Vanguard Group and BlackRock Inc.
rank as either the second- or third-biggest holders of each of those securities.Investors have been selling off the long-dated 30-year bond for a number of reasons. They include concerns about the growing U.S. budget deficit and the need for an increased supply of government debt, dysfunction in Congress, and the Fed’s fight against inflation. The value of the 30-year bond issued in 2020 has tumbled 53% to 55% — putting the declines on par with the slumps seen in the S&P 500
during the 2007-2009 crisis and the bursting of the Internet bubble at the start of this century. See also: Wall Street worries U.S. could lose last AAA rating as political chaos fuels government-shutdown fears Like other central ban …

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