The Treasury’s November refunding opened softly. Monday’s 58 billion dollar three year note auction stopped at a high yield of 4.627 percent, half a basis point above the 4.622 percent when issued yield at the deadline, the largest tail on a three year sale since May. The stop was 30.5 basis points below October’s 4.932 percent, so the Treasury paid far less than a month ago, but it still had to concede a small premium to clear the paper.
Demand thinned on the standard gauges. The bid to cover ratio fell to 2.53, from 2.62 in October and below the six auction average of 2.64, the weakest reading of 2026 on one account. Indirect bidders, the category that includes foreign central banks and other overseas buyers, took 55.5 percent of the competitive award, down from 57.6 percent in October and well below a twelve month average above 62 percent.
What kept the sale orderly was domestic demand. Direct bidders took a record 35.0 percent, up from 31.7 percent in October, while primary dealers were left with only 9.5 percent, below their recent average. In other words, US money managers stepped in at 4.627 percent even as the foreign bid faded.
The result sets the tone for the rest of the refunding. The 42 billion dollar 10 year note sells today at 1:00 p.m. Eastern, hours after the October CPI print, and the 25 billion dollar 30 year bond follows on Thursday, with the cash market closed Wednesday for Veterans Day. If indirect demand stays light at the 10 year, the tail risk sits with the long end of a curve whose two year yield already prices a December hike as close to settled.