A three-year note auction on Tuesday, with a face value of $58 billion. The high yield was 3.67%, down from last month’s but somewhat higher than expected. Overall demand was slightly weak and foreign demand was lower than typical. Not a great auction, but so much uncertainty over interest rates, the deficit, trade and tariffs and the overall economy that it isn’t a surprise.
And then on Wednesday, we did see a really pretty bad auction, of a longer-term issue, the critical ten-year note. $42 billion worth, a pretty high amount for this series. The high yield was 4.26%, lower than for the same series last month, but higher than expected, the first time that has occurred in 6 months. The demand stats were the real problem. Overall demand was very weak, far weaker than for recent 10-year note auctions and foreign buying was somewhat weak, with domestic buyers not filling the gap. The week will close with a 30-year bond auction tomorrow and that will be quite interesting.
And the bad week for Treasury issuance continued today, with a 30-year bond auction that was also ugly. $25 billion were sold at a high yield of 4.81%, a little lower than in July, but higher than expected. Demand was again weaker than usual, including from foreign and domestic buyers. After-market yields across the debt spectrum rose. No matter what the Federal Reserve does with interest rates, the buyers are demanding a certain level in order to keep buying our ever-growing debt pile.