U.S. Treasury Auctions Show Solid Demand From Bonds to Bills

A string of U.S. Treasury auctions over the past week attracted firm demand across maturities, even as investors navigated an uncertain economic outlook. The $20-year benchmark sale cleared at a high yield of 4.876%, down roughly 6 basis points from the prior reopening, with a bid-to-cover ratio of 2.54. Direct bidders took 26.5%, up from 21.9% previously, while indirect participation slipped to 60.6%. Inflation-linked debt also drew strong interest. The $30-year Treasury Inflation-Protected Securities auction stopped at 2.65%, more than 20 basis points above the prior offering, yet the bid-to-cover improved to 2.78 from 2.48. Direct buyers stepped up to 25.1% of the allotment, while indirect demand accounted for 70.4%. Demand was similarly healthy at the short end. The Treasury’s $100 billion four-week bill sale produced a high yield of 4.30% and a 2.61 bid-cover. Three-month bills worth $82 billion cleared at 3.11% with a 3.07 cover, and the $73 billion six-month tranche priced at 3.915% with a 3.36 cover. The Federal Reserve’s System Open Market Account submitted non-competitive bids totaling $3.6 billion in the three-month auction and $3.2 billion in the six-month sale. Outside the United States, the European Union sold €1.454 billion of 3.375% 2038 bonds at an average yield of 3.489% and a bid-to-cover ratio of 1.25, underscoring continued investor appetite for high-grade sovereign debt.