On the eve of the highly anticipated release of the US CPI data, the performance of the 10-year US Treasury bond auction was impressive
The winning bid rate for this 10-year government bond auction is 4.276%, significantly lower than the 4.438% in June. As the "buyer of last resort" taking over all unsold supply, primary dealers were allocated only 11.5%, highlighting strong real demand. Analysts believe that after the steady performance of the 3-year U.S. Treasury auction the previous day, this 10-year U.S. Treasury auction once again performed well, confirming that the market has no concerns about the U.S. CPI data on Thursday
On Wednesday local time, the U.S. Treasury auctioned $39 billion of 10-year Treasury notes, with the overall auction results strong and robust.
The winning yield for this 10-year Treasury note auction was 4.276%, significantly lower than the 4.438% from the auction on June 11, marking the lowest level since May. The winning yield this time was 1 basis point lower than the pre-issued yield of 4.286%, indicating no tail spread reflecting weak demand for the second consecutive time.
The bid-to-cover ratio for the 10-year U.S. Treasury note in July was 2.58, lower than the 2.67 in June but higher than the average of the past six auctions, which was 2.52.
As a measure of domestic demand in the U.S., the allocation to Direct Bidders, including hedge funds, pension funds, mutual funds, insurance companies, banks, government agencies, and individuals, was 20.9%, the highest since October 2023.
Overseas demand remained stable. As an indicator of foreign demand, the allocation to Indirect Bidders, typically foreign central banks and other institutions participating through primary dealers or brokers, was 67.6%, slightly lower than the near-record level of 74.6% in June but higher than the recent average of 67.2%.
As the "buyer of last resort" who takes all unsold supply, Primary Dealers had an allocation of only 11.5% in this round, the lowest since August last year, highlighting strong real demand.
Financial blog Zerohedge commented that after the strong performance of the 3-year Treasury note auction the previous day, this 10-year Treasury note auction was another very strong auction, confirming that the market has no concerns about the U.S. CPI data on Thursday. Wall Street clearly expects the CPI data to be lower than expected.
Following the release of the results of the 10-year Treasury note auction, the yield on the 10-year Treasury note fell, reaching an intraday high of 4.30% just minutes before the auction results were announced