US Treasury Sees Mixed Demand in $97 Billion Bond Sales

The United States Department of the Treasury conducted a series of long-term securities auctions this week with varying levels of investor demand. On Tuesday, the department sold $58 billion in three-year bonds at a high yield of 4.932%, the highest level since May 2006. While the auction stopped through the When Issued yield, internal data revealed weakening demand from indirect buyers, who slumped to 57.59%, the lowest level since February.

This decline in foreign demand was offset by direct bidders, who took 31.66% of the issuance. Primary dealers held 10.7% of the sale, which was below the recent average of 12.6%. The bid-to-cover ratio for the three-year notes fell to 2.616, remaining below the six-auction average.

Demand recovered on Wednesday during the auction of $39 billion in ten-year notes. This sale resulted in a high yield of 5.300 percent and a bid-to-cover ratio of 2.77, significantly surpassing the 2.52 average seen across the previous ten auctions. The Treasury is scheduled to conclude its series of long-term securities announcements on Thursday with the results of a $22 billion sale of thirty-year bonds.