Foreign Demand at U.S. 10-Year Treasury Auction Hits Third Highest on Record
Alina Collins
The U.S. Treasury sold $39 billion in 10-year notes with indirect bidders — mostly foreign buyers — taking 81.5%, the third-highest share on record, signaling robust overseas appetite even as yields climbed sharply.
Was this a strong auction?
The high yield came in at 4.580%, stopping 0.6 basis points through the when-issued yield of 4.586% — the largest "stop-through" since September 2025.
This means → bidders were willing to accept a lower yield than the open market offered, a clear sign demand exceeded expectations.
The bid-to-cover ratio rose to 2.593, above last month's 2.565 and the six-auction average of 2.46 — also the highest since September 2025.
Who was buying, and why so aggressively?
Indirect bidders — a proxy for foreign buyers — took 81.5% of the offering, up from 78.21% last month and the third-highest share ever recorded.
In plain terms = for every $100 of bonds sold, more than $81 went to foreign institutions — only two auctions in history saw a higher share.
This reflects sustained overseas allocation demand at the current 4.58% yield level.
Dealers took very little — what does that tell us?
Direct bidders took just 10.73%, the lowest since April 2025. Primary dealers absorbed only 7.8%, down from 9.5% last month and the lowest since January 2025.
This means → dealers are the "buyer of last resort." The less they take, the stronger the market's own absorption — and the higher the auction quality.
In plain terms = the bonds sold themselves; no need for dealers to backstop.
Can this strong demand last?
The auction took place against a backdrop of sharply rising yields — conditions that typically dampen demand. Foreign buyers stepped up anyway.
This signals that current yield levels may have hit an allocation "sweet spot" for some overseas institutions.
But one auction is not a trend — follow-up sales remain the key test of whether foreign demand is truly durable.
Content is for reference only, not financial advice.