The U.S. government will pay 5% a year for the next decade on its newest 10-year debt. The Treasury Department sold $42 billion of 10-year notes on Tuesday at a high yield of 5.02%, setting the coupon at 5%, in an auction that drew softer demand on the same day a hot inflation report jolted bond markets.
Investors bid about $103.3 billion, a bid-to-cover ratio of 2.46, down from 2.77 at October’s reopening and the lowest for a 10-year sale since May. The notes priced roughly one basis point above their yield in when-issued trading just before the 1 p.m. deadline, a tail that signals buyers wanted a concession. Primary dealers, who must take what others don’t, were left with 9.8% of the competitive awards, up from 2.5% in October.
Who bought
Indirect bidders, a group that includes foreign central banks and funds bidding through intermediaries, took 61.2%, their smallest share at a nominal 10-year auction since at least October 2025. Direct bidders, typically domestic money managers bidding for their own accounts, took 29%, the largest share in that span. The median accepted yield was 4.961%, and 95% of bids at the high yield were filled.
A hot inflation print
The sale followed October consumer-price data showing prices up 0.4% on the month and core prices up 0.3%. Two-year yields rose about 17 basis points, their largest one-day jump of the year, as traders priced in more tightening, and the benchmark 10-year yield climbed to around 5% before closing just under that level. The Federal Reserve held its target range at 3.75% to 4% in October and next meets Dec. 8-9.
The auction was the second of three this week. A $58 billion three-year sale on Monday also drew soft demand, and $25 billion of 30-year bonds is set for Thursday. The new 10-year notes settle Nov. 16. Higher government yields set the floor for corporate borrowing costs, as Fox’s $8.4 billion bond sale showed the same afternoon.
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