Foreign Demand for U.S. Treasury Auctions Remains Tepid as 3-Year Tails
Monday’s $58 billion 3-year Treasury auction, the first of this week’s three coupon sales (more than one year in maturity), tailed (yield above expectations) for the first time since June. That ended a run of four straight stop-throughs (yield below expectations). That was even as direct (domestic) bidders took a record share, not enough to offset softer demand from indirect bidders, a group that includes foreign buyers.
The auction cleared at 4.627%, down from 4.932% in October (the highest since May 2006). That was 0.5 basis points above the 4.622% when-issued yield at the bid deadline, and compares with an average stop-through of 0.1 basis points over the prior six auctions.
Looking at the rest of the metrics:
–Overall demand (bid-to-cover) fell to 2.53, the lowest since August 2025, from 2.62 in October and below the six-month average of 2.64.
–Indirect bidders (which include foreign buyers) slipped to 55.5%, the lowest since August 2025, from 57.6% in October and well below the six-month average of 63.0%.
–Direct (domestic) bidders rose to 35.0%, the highest in Treasury data going back to 2008 (topping 31.9% in February), from 31.7% in October and well above the six-month average of 24.8%.
-That left dealers with 9.5%, the lowest since July, down from 10.7% in October and below the six-month average of 12.2%.
It’s the same story as the 2-year, 5-year and 7-year auctions two weeks ago: domestic buyers took an outsized share while the indirect bid stayed below average. That kept dealers’ share low, but softer overall demand still left a small tail.
The 10-year follows this afternoon and the 30-year Thursday.