Treasury Yields have risen and now the Powerball cash option amount is less than 50% of the jackpot

for the first time in years.

Back in 2020 I put up this thread where I discussed how the stated cash option is more than 50% of the jackpot, because the Annuity is structured with Treasury Bonds. When yields are low they need more cash on hand to buy an annuity for a given jackpot.

Since late August the yield on the 30 year has risen above 3.33% which is an important milestone when figuring the payout. The yield has been consistently below that level since late 2011 but has jumped an entire percentage point in the last 60 days.

I realize lotteries are not investment vehicles, but recently I noticed the cash option figure dropping relative to the jackpots on both the Mega Millions and the Powerball lotteries so I thought a followup to that 2 year old thread might be of interest.

https://finance.yahoo.com/quote/%5ETYX?p=%5ETYX

The coupon on that paper is 3% right now, so with that 4.14% yield, the bonds are selling at a discount to par, so you can pick up a $1000 face value issue for a little over $800.

https://www.bloomberg.com/markets/rates-bonds/government-bonds/us