Treasury 10-Year Notes May Yield 2.356% at Auction, Survey Shows

The Treasury’s $24 billion sale of 10-year notes may draw a yield of 2.356 percent, according to the average forecast in a Bloomberg News survey of eight of the Federal Reserve’s 22 primary dealers.

The securities, which mature in November 2024, yielded 2.355 percent in pre-auction trading. Bids are due by 1 p.m. New York time. The yield at the 10-year debt offering on Oct. 8 was 2.381 percent, the least since June 2013. The record-low auction yield was 1.459 percent in July 2012.

The bid-to-cover ratio, which gauges demand by comparing the amount bid with the amount offered, was 2.52 at last month’s sale, the lowest level since August 2013. The average at the past 10 auctions was 2.70.

Indirect bidders, a class of investors that includes foreign central banks, bought 44.4 percent of the notes at the October sale, versus an average of 45.4 percent at the past 10 offerings.

Direct bidders, non-primary-dealer investors that place their bids directly with the Treasury, purchased 6.6 percent of the securities at last month’s sale. The average at the past 10 auctions was 16.3 percent.

Ten-year notes have gained 8.6 percent this year, compared with a 4.7 percent return 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 totaling $66 billion. The U.S. sold $26 billion of three-year debt Nov. 10 at a yield of 0.998 percent and will auction $16 billion of 30-year securities tomorrow.

The sales will raise $6.2 billion of new cash, as maturing securities held by the public total $59.8 billion, according to the U.S. Treasury.

Primary dealers trade government securities with the Fed and are obliged to participate in Treasury sales.

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