Brian Chappatta, Columnist

The U.S. Yield Curve Is Holding Up for Now

Yes, the Treasury is borrowing trillions of dollars. No, it won’t have any trouble doing so.

May 6, 2020 at 3:39 PM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

It’s going to take more than volume.
Photographer: Victoria Jones/AFP/Getty Images

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The U.S. Treasury Department rarely surprises bond traders when it announces its borrowing plans for the coming quarter. But like many things during the coronavirus pandemic, precedents no longer seem to apply.

Staring down a budget deficit approaching $4 trillion, Treasury Secretary Steven Mnuchin unveiled a plan Wednesday that starts to focus overall issuance increases on longer-term debt. The U.S. will auction $32 billion of 10-year notes, more than the consensus expectation for $29 billion, and $22 billion of 30-year bonds, more than the forecast of $21 billion. In perhaps the most stunning move of all, the Treasury will revive the 20-year bond for the first time on May 20, with an initial offering size of $20 billion, blowing away Wall Street calls for somewhere between $12 billion and $14 billion.