Treasury Bonds Sell Off After Weak Five-Year Auction Pushes Yields Higher
The $70 billion sale priced at a 5.033% yield, 3.1 basis points above the when-issued level, marking the second-largest auction tail on record.
U.S. Treasury bonds sold off Wednesday after weak demand at a $70 billion five-year note auction pushed borrowing costs higher across maturities.
The notes priced at a 5.033% yield, up from 4.391% at the previous sale and marking the first five-year Treasury yield above 5% since 2007. The result was 3.1 basis points above the 5.001% when-issued yield, creating the second-largest auction tail on record.
Demand weakened across several measures. The bid-to-cover ratio fell to 2.212 from 2.371, its lowest level since December 2018. Indirect bidders received 54.31% of the sale, down from 61.51%, while direct bidders took 29.92%.
Dealers were left with 15.8% of the notes, their largest share since May 2024. The five-year yield had already risen 15 basis points heading into the auction, reaching 4.99%.
The pressure extended across the Treasury market. The 10-year yield later traded just below 5.13% as the sell-off spread along the curve.
