Strong demand for record tender in the US

The U.S. Treasury’s record-breaking 10-year bond auction was met with strong demand. While there was strong demand for the record-breaking 10-year bond auction held by the U.S. Treasury on Wednesday, the yield was below expectations. The yield in the auction, at 4.093%, was below the 4.105% yield on the 10-year bond traded in the market prior to the conclusion of the auction. The 10-year bond sale, with $42 billion, surpassed the $41 billion peak reached in November 2020. Following the U.S. Treasury’s latest change in auction sizes last week, three of the seven bond and note issuances to be held, including 2- and 5-years, were expected to reach record amounts in the February-April period. There was also strong demand for Tuesday’s $54 billion 3-year bond auction, while the U.S. Treasury is expected to complete its quarterly borrowing with the sale of $25 billion 30-year notes on Thursday. “The conclusion here is that the increased auction size did not scare investors, in fact, it was the opposite. This could set the stage for a nice rally, but given today’s 30-year bond auction and Friday’s CPI revisions, the increases are likely to be limited,” said Cameron Crise, MLIV macro strategist.