Appetite wanes for US treasuries

Yesterday there was dampened interest in a $21bn issue of 10-year bonds. Today, as we await the outcome of the $13bn 30-year auction, there seems to be ever less interest in these longer-dated bonds: the spread between 2- and 30- year bond yields is at its highest for 17 years. Presumably investors are worried about inflation as the government deficit reaches a record $1,400bn. If this is the start of a trend, the US government will find it increasingly expensive to fund its debt-financed stimulus and bail-out packages.

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