Treasury 10-Year Auction Draws Strong Demand

The U.S. Treasury sold $39 billion in 10-year notes on Wednesday at a high yield of 5.300%, and the auction drew stronger demand than the market had priced immediately beforehand. The sale followed a climb in the benchmark 10-year yield to about 5.35%, its highest level since 2002, before yields retreated after the results. The auction’s high yield was below the 5.317% when-issued level, the rate at which the notes were trading just before the sale. That difference, known as a stop-through, indicated buyers accepted a lower yield than the market had signaled ahead of the auction. Reports also described overall bidding as above average. Indirect bidders took about 80.3% of the notes, above the reported 10-auction average of 72.4%. Dealers bought 2.5%, a small share of the offering. The auction results showed demand at a time of elevated yields, though the reported details do not establish why investors chose to buy. The 10-year yield had reached its session high earlier Wednesday. After the auction, it was reported near 5.29%, below the peak. A separate account put the peak at 5.36%; the available reports do not resolve the difference.