The 10-year Treasury yield rose by 4.5 bps following a weaker-than-expected 10-year note auction on Wednesday.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
The $42 billion auction marked the first tail since February. A tail occurs when the high yield comes in above the when-issued (WI) yield. In this instance, the high yield of 4.255% was 1.1 bps above the WI yield of 4.244%, signaling weak auction demand. For context, a note’s price has an inverse relationship with its yield.
Bid-to-Cover Drops, Remains Solid
The bid-to-cover ratio for Wednesday’s auction fell to 2.35 from 2.61 during the previous auction. The ratio has averaged 2.58 over the past ten 10-year note auctions and reflects the amount of bids received for each dollar of securities offered.
A ratio of 2.35—below the recent average—suggests weakening demand and growing caution toward U.S. debt. However, a ratio above 2.0 is still generally considered a sign of healthy investor demand.
Track the 10-year Treasury yield and other key economic metrics with TipRanks’ Economic Indicators Dashboard.
