Ten-Year Note Auction Attracts Below Average Demand

(RTTNews) - Following yesterday's auction of $27 billion worth of three-year notes, the Treasury Department sold $21 billion worth of ten-year notes on Wednesday, attracting below average demand.

The ten-year note auction drew a high yield of 2.597 percent and a bid-to-cover ratio of 2.57.

The Treasury also sold $21 billion worth of ten-year notes last month, drawing a high yield of 2.648 percent and a bid-to-cover ratio of 2.88.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

The ten previous ten-year note auctions had an average bid-to-cover ratio of 2.72.

Peter Boockvar, managing director at the Lindsey Group, said, "Whether it was the unattractive yield at the lower end of the one year ten-year yield average of 2.5-3%, a rethink of inflation, nervousness ahead of the FOMC minutes, a change of mind after the yield curve flattening we've seen or it was just a bad day, the auction was poor."

Looking ahead, the Treasury is due to finish off this week's series of long-term securities auctions with the sale of $13 billion worth of thirty-year bonds on Thursday.