Treasury 10-Year Notes May Yield 2.039% at Auction, Survey Says

The Treasury’s $24 billion sale of 10-year notes may draw a yield of 2.039 percent, according to the average forecast in a Bloomberg News survey of eight of the Federal Reserve’s 21 primary dealers.

The notes, which mature in February 2023, yielded 2.035 percent in pre-auction trading. Bids are due by 1 p.m. New York time. The record-low sale yield, 1.459 percent, was reached at the July 11 offering.

The January auction’s bid-to-cover ratio, which gauges demand by comparing the amount bid with the amount offered, was 2.83, versus an average of 2.96 at the past 10 sales.

Indirect bidders, a class of investors that includes foreign central banks, bought 28.5 percent of the notes at last month’s offering, compared with an average of 37 percent at the past 10 auctions.

Direct bidders, non-primary-dealer investors that place their bids directly with the Treasury, purchased 14.8 percent of the offering in January, after buying a record-high 45.4 percent of the notes at the July sale. The average at the past 10 auctions was 20.4 percent.

Ten-year U.S. debt has lost 1.9 percent this year, according to a Bank of America Merrill Lynch indexes, almost double the 1 percent loss in the broader Treasury market. The notes returned 4.2 percent in 2012, compared with a 2.2 percent gain by Treasuries overall.

This is the second of three auctions this week as the government sells $72 billion of notes and bonds. It auctioned $32 billion of three-year securities yesterday, drawing a record-high direct bid of 26.9 percent, and is due to sell $16 billion of 30-year debt tomorrow.

The auctions will raise $8 billion of new cash, as maturing securities held by the public total $64 billion, according to the Treasury.

Primary dealers trade government securities with the central bank and are obliged to participate in U.S. debt sales.

Before it's here, it's on the Bloomberg Terminal.