Foreign and International Banks Dominate 10-Year Treasury Auction

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Another 10-year Treasury note auction has come and gone, and the auction should not be viewed as a disruptive one. The 10-year Treasury was $23 billion and the yield was close to 1.73% right before the 1:00 p.m. auction results, versus about 1.71% the prior day.

Wednesday’s auction was for a 1.625% coupon that went off at a 1.73% yield. Some 4.46% were allotted at the high and the price paid was 99.039809% of par value. The low yield was 1.63% and the median yield tendered was 1.69%.

In the competitive auction process, the Treasury showed that some $58.85575 billion was tendered and $22.9756578 billion was accepted. Only $23.374 million was in noncompetitive bids.

Indirect bidders, including foreign and international monetary authorities placing bids through the Federal Reserve Bank of New York, took the lion share here, with some $16.35975 billion being tendered and $14.315196 billion accepted.

Primary dealers tendered for $36.212 billion worth of the 10-year notes, but they were awarded $5.136 billion in the auction. Direct bidders, which are non-primary dealer submitters bidding for their own house accounts, tendered $6.284 billion and saw $3.523 billion accepted.

Wednesday’s 10-year Treasury auction generated a bid-to-cover ratio of 2.56 and the notes mature on February 15, 2026. That ratio is a tad lower than average, but not by enough to make much of a wave.

Now consider that the U.S. Debt Clock has risen above the $19 trillion mark.