What they're not telling you: The week's lone coupon foreign-demand-since-jan-2025-as-yields-s.html" title="Dismal, Tailing 10Y Auction Sees Lowest Foreign Demand Since Jan 2025 As Yields Soar" style="color:#1a1a1a;text-decoration:underline;text-decoration-style:dotted;font-weight:500;">auction-prices-on-the-screws-with-solid-foreign-demand.html" title="Solid 7Y Auction Prices "On The Screws" With Solid Foreign Demand" style="color:#1a1a1a;text-decoration:underline;text-decoration-style:dotted;font-weight:500;">auction priced at 1pm when the Treasury sold $13 BN in 20Y paper, in a solid if not stellar auction. The auction stopped at a high yield of 4.883%, up from 4.817% in March and the highest since last July. It also stopped through the 4.892% When Issued by 0.9bps, the highest since January.
# THE TAKE: The 20Y Auction Tells You Everything About Dollar Desperation That "above-average foreign demand" isn't confidence—it's capitulation. When non-US buyers desperately scoop long-duration Treasuries, they're not placing bets on American strength. They're hedging currency collapse elsewhere. The ECB is a zombie. China's growth is fiction. So where else goes $13 billion in 20-year paper? The real story: the US debt machine works *because* the world has nowhere else to hide. This isn't exceptionalism. It's the tyranny of the least-ugly option. That solid auction stops through cleanly because the Fed's invisible hand still props the long end. Remove that, watch what happens. Foreign demand evaporates the moment yield differentials can't compensate for dollar volatility. This auction was a successful mugging, not a vote of confidence.
What the Documents Show
The bid to cover was 2.68, down from 2.76 in March but above the 2.63 six-auction average. The internals were also solid with Indirects taking 67.4% of the auction, down modestly from 69.2% last month but also above the 62.9% recent average for foreign buyers. And with Directs taking 22.9%, up modestly from 21.6% last month, Dealers were left holding just 9.7%, down from the recent average of 11.2%. Overall, this was another solid auction, which is a welcome outcome at a time when 10Y yields are trading near weekly highs just around 4.30%. Make sure to read our "How To [Read/Tip Off] Zero Hedge Without Attracting The Interest Of [Human Resources/The Treasury/Black Helicopters]" Guide It would be very wise of you to study our privacy policy and our (non)policy on conflicts / full disclosure .
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- Category: Global Power
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