The 10-year Treasury yield eased from its highest level since 2002 after a $39 billion auction drew strong demand from investors.
U.S. Treasury yields retreated from their session highs after investors showed strong demand at a $39 billion sale of 10-year notes. Markets were also waiting for the release of minutes from the Federal Reserve’s September meeting.
The 10-year yield had climbed to 5.35%, its highest level since 2002. After the auction, it eased to about 5.282%, still roughly one basis point higher. The 30-year yield fell to 5.655%, below a 24-year high. One basis point is 0.01 percentage point. Bond prices generally move in the opposite direction from yields.
Demand at the auction was strong. Indirect bidders, including global central banks, bought 80.3% of the notes, above the 72.4% average for the previous 10 auctions. Direct bidders took 17.1%, slightly below their 18.3% average. Dealers bought 2.5%, well under their 9.4% average. The auction yield was 5.3%, the highest since 2000.
The sale was the second of three Treasury offerings scheduled for the week. The department sold $58 billion in three-year notes on Tuesday. A $22 billion sale of 30-year bonds and a buyback operation targeting maturities of 20 to 30 years were scheduled for Thursday. The liquidity-support buyback was expected to total at least $4 billion, twice the usual size.
Investors have been selling bonds in recent weeks amid concerns about inflation and rising energy prices. The 10-year yield has gained 60 basis points since the end of July, while U.S. crude prices have risen 20%. Selling pressure has also spread overseas. France’s 10-year yield rose 12 basis points to 4.876%, while the U.K. 10-year gilt yield climbed seven basis points to 5.447%.
Minutes from the Fed’s September meeting were due later Wednesday. Traders were looking for clues about the central bank’s next policy steps. At that meeting, policymakers raised interest rates for the first time since 2023. The latest New York Fed survey also showed that the one-year inflation outlook had climbed to its highest level since May 2023.