Ten-Year Treasury Auction Shows Big Bias Reversal From Two Weeks Ago

Banking, finance, and taxes

Published: June 11, 2014 1:50 pm

It has only been about 10 days since we pondered whether the bond rally was signaling the risk of a recession or something else negative in a flight to safety trade. And now a 10-year Treasury auction has gone off rather poorly, and suddenly 10-year Treasury rates are up almost 20 basis points from their lows less than two weeks ago.

The Treasury’s 10-year note auction of a 2.5% coupon went off with a high yield of 2.648%, with some 96.96% allotted at the high yield for a price of 98.714636. These are technically nine years and 11 months to the May 15, 2024, maturity.

The bid-to-offer rate was 2.88, implying that $2.88 was tendered for every $1 accepted by the Treasury.

Primary dealers tendered the most at $40.238 billion, but only $9.33 billion was accepted. Direct bids, non-primary dealers bidding for their own accounts, were $5.915 billion, with almost 44.07 billion accepted. Indirect bids, which include foreign bank demand, had over $14.35 billion tendered and $7.56 billion accepted.

Wednesday’s 10-year Treasury auction may not be a disaster for rates, but this may set the tone for a weaker 30-year Treasury auction due on Thursday.

Poor demand in an auction just two weeks after a bottom in yields generally signals one of two things: 1) the economy is getting better, or 2) no one wants to loan Uncle Sam money this low for 10 years.

ALSO READ: The 10 Best Chinese Stocks to Own Now

Are You Still Paying With a Debit Card?

The average American spends $17,274 on debit cards a year, and it’s a HUGE mistake. First, debit cards don’t have the same fraud protections as credit cards. Once your money is gone, it’s gone. But more importantly you can actually get something back from this spending every time you swipe.

Issuers are handing out wild bonuses right now. With some you can earn up to 5% back on every purchase. That’s like getting a 5% discount on everything you buy!

Our top pick is kind of hard to imagine. Not only does it pay up to 5% back, it also includes a $200 cash back reward in the first six months, a 0% intro APR, and…. $0 annual fee. It’s quite literally free money for any one that uses a card regularly. Click here to learn more!

Flywheel Publishing has partnered with CardRatings to provide coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.