Wednesday’s 10-year reopening (a 9-year-10-month security, CUSIP 91282CRF0) cleared at 5.300 percent against a when-issued level of 5.317 percent, a 1.7bp stop-through that counts as a strong result. The bid-to-cover ratio was 2.77x, above a recent average near 2.5x and the highest since 2016, with about $108 billion in bids for $39 billion accepted. Indirect bidders, the category that includes foreign investors, took 80.3 percent, the highest share since September last year; direct bidders took 17.1 percent; and primary dealers were left with just 2.5 percent, a record low that Reuters notes is the smallest dealer share since the aftermath of the global financial crisis. Last month’s 10-year cleared at 4.834 percent, so the Treasury paid roughly 47bp more to borrow for a decade than it did 30 days ago.
The contrast with Tuesday’s $58 billion 3-year sale is the story: foreigners retreated to 57.6 percent there, the lowest since February, and domestic directs carried the slack. At 5.3 percent, the 24-year highs in rates brought the buyers back, and the 10-year market yield dropped about 5bp from its intraday peak to settle around 5.28 percent in the afternoon, per Reuters; it opened Thursday at 5.28 percent. Strategists called the result strong, though the relief was real but narrow, with yields steadying rather than rallying further.
The week’s supply wall continues: $22 billion of 30-year bonds auction Thursday at 1pm ET, the real long-end test after the 30-year touched a fresh 24-year high intraday Wednesday.