Treasury Seven-Year Note Auction Sets 5.085% Yield as Costs Rise
The $44 billion sale cleared 57.3 basis points above the Aug. 27 auction, while the bid-to-cover ratio slipped to 2.42 from 2.50.
The U.S. Treasury sold $44 billion in seven-year notes at a 5.085% high yield Sept. 24, adding pressure to borrowing costs as the bid-to-cover ratio eased from the prior auction.
The yield was 57.3 basis points above the 4.512% result from the Aug. 27 sale. The bid-to-cover ratio, which compares total bids with the amount offered, fell to 2.42 from 2.50.
Treasury auctions accept competitive bids starting with the lowest yields and continue upward until the full offering is awarded. The highest accepted yield becomes the rate paid on the notes issued through that auction.
The result added to pressure on borrowing costs across financial markets. Higher Treasury yields can tighten financial conditions and weigh on economic growth, but the auction result does not by itself establish why yields have risen.
The seven-year note auction followed the five-year Treasury auction that also cleared above 5%. The Treasury typically holds a seven-year note sale each month, with issuance usually scheduled for the month’s final calendar day.
