The selling today and recent days in equities is driving the interest in Treasury notes and bonds again. Just when you thought that interest rates could not go much lower. Today brough a 10-Year U.S. Treasury Note auction and the auction results were nothing short of stellar.
The prior yield on the on-the-run 10-year note was almost 1.73% as of noon today and the Treasury auction went off at only 1.70%. The $21 billion Treasury auction also had a substantial bid to cover ratio of 3.26 today. That is $3.26 in bids for every $1.00 offered. This strong bid to cover was well above the 3.11 average from the most recently tracked 10-year auctions.
If CNBC is any judge, the bond auction was confirmed as stellar because the financial news network’s vocal Rick Santelli gave it an “A++” rating as far as a school grade is concerned. It is also worth noting that some 22.9% of the bids were direct and that is above the average as well.
Since September 28 we have seen a low of 1.60% and a high of 1.75% on the 10-year note prior to today’s change.
JON C. OGG