A U.S. government auction of 30-year bonds met a dismal reception on Thursday, driving down bond and stock prices and raising fears the United States may face difficulty financing spending to stimulate the economy.
The $14 billion auction met below-average demand from investors, who forced the government to pay a higher yield. An extended trend of rising yields could force up longer-term interest rates throughout the economy.
It was the first 30-year auction since the government said last week it would move to monthly sales of long bonds, which some analysts say are harder to sell than other maturities.
"It was a horrible auction," said Mary Ann Hurley, vice president of fixed-income trading at D.A. Davidson & Co in Seattle.
"It just does not bode well for interest rates. It's ugly, it's very, very ugly," Hurley added.
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