- The 20-year bond will re-launch Wednesday for the first time since 1986 at a regularly scheduled auction. The nominal yield should be about 1.05%.
- The Treasury will raise $20 billion in this auction, part of a massive borrowing effort this year, to fund COVID19 relief programs.
- The nominal yield of 1.05% is highly unattractive for small-scale investors. Series EE Savings Bonds offer equal safety at the same term with a massive yield advantage.
The U.S. Treasury will re-launch its 20-year bond in a historic auction Wednesday, offering $20 billion of this new issue, CUSIP 912810SR0. The 20-year bond has not been sold to the public regularly since 1986.
My reaction? This is a great idea for the Treasury. It’s also a lousy investment for small-scale investors. And there is a much, much better alternative available, also with a 20-year term, and just as safe.
Read my analysis on SeekingAlpha.com
That auction will be coming up May 21. The announcement is this Thursday. I will be writing about that auction over the weekend, after the market closes on Friday. But already know I won’t be a fan of a 10-year TIPS with a real yield of about -0.45%.
What do you think about the auction this coming Thursday for the re-issue of the 10-year TIPS note 0.12500% 01/15/2030, CUSIP 912828Z37? You liked the “Gorgeous Result” when this note was re-issued last time back in March. Of course that was a very different world from what we have today.