The US Treasury completed a key debt auction this week, selling 39.7 billion dollars in nearly 10-year notes at a high yield of 4.421 percent. Demand was stronger than expected, signaling continued investor confidence in US government bonds despite higher interest rates and ongoing political uncertainty.
The securities are part of the C-2035 series and will mature on May 15, 2035. They carry a coupon rate of 4.25 percent.
Strong institutional and global demand
The auction attracted over 109 billion dollars in total bids. The bid-to-cover ratio reached 2.60, which is above the historical average. This means that for every dollar issued, investors offered more than two dollars in bids.
Indirect bidders, which include foreign central banks and sovereign funds, were awarded over 70 percent of the total. US-based direct bidders took 8.3 billion dollars, while primary dealers ended up with just 3.7 billion. Non-competitive bids totaled 147 million dollars and were accepted in full.
What this auction means for the markets
First, it confirms that the US government is still able to raise large amounts of capital even with elevated yields. This reinforces the global market’s trust in the US Treasury as a reliable issuer, even with rising concerns around the debt ceiling.
Second, a 4.42 percent yield on 10-year notes sets a higher benchmark for borrowing across the economy. Mortgage rates, corporate financing, and consumer credit may all feel the impact of this elevated cost of capital.
Third, the high level of foreign participation shows that in a world of uncertainty, US assets remain a safe haven. Even with inflation and geopolitical tension, global institutions continue to anchor their portfolios in US debt.
