Treasury yields jump as auction of 20-year bonds tests Wall Street's appetite for more US debt

• Treasury yields hit fresh 16-year highs earlier on Wednesday, continuing a massive bond sell-off.
• Long-dated bonds saw big moves, with the 10-year rate topping 4.9% and the 30-year rate surpassing 5%

Treasury yields climbed to fresh 16-year highs on Wednesday, then pared gains after a bond auction saw improved demand for US debt.

Long-dated bonds in particular saw big moves earlier in the session, with the 30-year rate breaking through the 5% threshold, while the 10-year rate jumped above 4.9%.

Wednesday's yield surge added to a jump Tuesday, when strong retail sales data suggested the US economy remains robust and may require more tightening from the Federal Reserve.

Meanwhile, the immense supply of new Treasury bonds hitting the market as federal deficits explode has raised questions about Wall Street's willingness to keep buying amid a historic sell-off.

Previous auctions have already shown significant levels of buyer disinterest, forcing dealers to have to buy up an abnormally large amount of Treasurys on offer.

But Wednesday's $13 billion auction of 20-year Treasurys saw demand improve as dealers' share of purchases matched the 11% historical average, down from the 18% share in last week's auction of 30-year bonds.

Still, investors have largely been stepping away from long-duration bonds out of uncertainty about the future economy and monetary policy, while concerns about growing federal deficits and US debt are pushing up term premium.

Wednesday's rise in yields is in line with earlier forecasts, with key commentators such as Larry Fink and Bill Ackman expecting Treasurys to soon trade above 5% levels.