Yesterday, the U.S. auctioned $39 billion in 10-year Treasury notes and received about $108 billion in bids.
The bid-to-cover ratio reached 2.77, its highest level since 2016.
Put simply, the U.S. wanted to borrow $100, and the market submitted $277 worth of purchase bids.
More interestingly, the yield on these Treasuries was about 5.317% before the auction, while the final auction yield was about 5.30%.
There was plenty of demand, and the issuer was still able to push the yield down a little, suggesting that demand at this auction was not weak.
However, note that a 2.77 ratio does not mean that 2.77 times the amount was ultimately sold. It is the ratio of the total bids submitted to the amount offered, making it more of a gauge of demand.
The other number worth thinking about is 5.30%.
A big part of what makes U.S. Treasuries attractive is that this yield is already high enough.
So a strong bond sale does not necessarily mean that market liquidity is especially abundant.
It could mean exactly the opposite:
Risk-free yields have risen high enough to make investors willing to pause in pursuit of a predictable return.
For non-yielding assets such as gold and BTC, that means a higher opportunity cost.
The bid-to-cover ratio reached 2.77, its highest level since 2016.
Put simply, the U.S. wanted to borrow $100, and the market submitted $277 worth of purchase bids.
More interestingly, the yield on these Treasuries was about 5.317% before the auction, while the final auction yield was about 5.30%.
There was plenty of demand, and the issuer was still able to push the yield down a little, suggesting that demand at this auction was not weak.
However, note that a 2.77 ratio does not mean that 2.77 times the amount was ultimately sold. It is the ratio of the total bids submitted to the amount offered, making it more of a gauge of demand.
The other number worth thinking about is 5.30%.
A big part of what makes U.S. Treasuries attractive is that this yield is already high enough.
So a strong bond sale does not necessarily mean that market liquidity is especially abundant.
It could mean exactly the opposite:
Risk-free yields have risen high enough to make investors willing to pause in pursuit of a predictable return.
For non-yielding assets such as gold and BTC, that means a higher opportunity cost.