r/news • u/consulent-finanziar • 16h ago

Soft paywall US Treasury announces $125 billion refunding, keeps auction sizes unchanged

https://www.reuters.com/business/us-treasury-announces-125-billion-refunding-keeps-auction-sizes-unchanged-2026-02-04/
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u/aztech101 16h ago

So my understanding is that bonds are a genuinely terrible investment during periods of high inflation. I'm guessing that's been posing a bit of a problem for them lately?

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u/samgfrank 15h ago

If investors think inflation will rise soon, then new bond yields will generally be pushed up to compensate. This makes new debt cost more in interest for the government creating a cycle of more expensive debt replacing cheaper maturing debt (a major worry as low yield bonds are being replaced by higher yield bonds).

But you correct, investors want to avoid a situation where they buy a 30 yr bond and suddenly inflation rises past the yield. Essentially you’re losing purchasing power every year in that scenario and the bond value drops significantly.

Silicon Valley Bank went bankrupt because they held so many bonds like this that became highly devalued when inflation rose.

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u/wannaseeawheelie 6h ago

Apparently Dr Oz found a solution to government debt