The Treasury’s $21 billion sale of 10-year notes may draw a yield of 2.633 percent, according to the average forecast in a Bloomberg News survey of seven of the Federal Reserve’s 22 primary dealers.
The securities, which mature in May 2024, yielded 2.635 percent in pre-auction trading. Bids are due by 1 p.m. New York time. The yield at the 10-year debt offering on May 7 was 2.612 percent. The record-low auction yield was 1.459 percent in July 2012.
The May auction’s bid-to-cover ratio, which gauges demand by comparing the amount bid with the amount offered, was 2.63, versus an average of 2.67 at the past 10 auctions.
Indirect bidders, a class of investors that includes foreign central banks, bought 49.3 percent of the notes at last month’s sale, versus 44.7 percent at the May offering. The average at the past 10 auctions was 45.2 percent.
Direct bidders, non-primary-dealer investors that place their bids directly with the Treasury, purchased 21.6 percent of the securities at the May sale. The average at the past 10 was 18.9 percent.
Ten-year notes have returned 4.9 percent this year, compared with a 2.5 percent gain in the broader U.S. Treasuries market, according to Bank of America Merrill Lynch indexes. The benchmark notes lost 7.8 percent in 2013, versus a 3.4 percent decline by Treasuries overall.
Today’s offering is the second of three note and bond sales this week. The U.S. sold $28 billion of three-year debt yesterday at a yield of 0.93 percent and will auction $13 billion of 30-year securities tomorrow.
The sales will raise $30 billion of new cash, as maturing securities held by the public total $32 billion, according to the U.S. Treasury.
Primary dealers trade government securities with the Fed and are obliged to participate in Treasury sales.