It only takes a quick glance at the US bond curve to realize something is off. One Treasury security — the 20-year — is detached from the rest of the market. It hovers at yields that are far higher than those on the bonds surrounding it — the 10-year and the 30-year.
This isn’t just some minor aesthetic for traders to fret about. It costs the American taxpayer money. Since the Treasury re-introduced the 20-year bond in monthly auctions four years ago, their sale has tacked on roughly $2 billion a year in interest expenses on top of what the government would have otherwise paid, a simple back-of-the-envelope calculation shows. That’s some $40 billion over the life of the bonds.