The 10-year Treasury yield pulled back from a 24-year high after the Treasury sold $39 billion in 10-year notes Wednesday with stronger-than-expected demand.
The 10-year yield finished around 5.282%, down from an intraday peak of 5.35%, which marked its highest level since 2002. The 30-year Treasury bond yield also retreated, trading at 5.655%, below a 24-year high reached earlier in the session.
BMO characterized the $39 billion auction as "strong." Indirect bidders, which include global central banks, took 80.3% of the sale, exceeding the 10-auction average of 72.4%. Direct bidders purchased 17.1%, slightly below their average of 18.3%. Dealers bought just 2.5%, well below their typical 9.4% share. Peter Boockvar, market strategist and author of The Boock Report, said the high yields "brought out the buyers and resulted in a great auction." The sale occurred at 5.3%, marking the highest auction yield since 2000.
Yields have risen sharply as investors worry about inflation and energy prices. The 10-year has climbed 60 basis points since the end of July, while U.S. crude prices soared 20% in that period. A separate release showed the New York Fed's Survey of Consumer Expectations pointed to one-year inflation expectations jumping to their highest level since May 2023.
The sales are part of three Treasury auctions this week. The government sold $58 billion in 3-year notes Tuesday and plans to sell $22 billion in 30-year bonds Thursday. Treasury also will conduct a buyback operation Thursday targeting 20-year to 30-year maturities, with an operation size of at least $4 billion, double the normal amount.
International government debt also sold off. France's 10-year yield surged 12 basis points to 4.876%, while the United Kingdom's 10-year Gilt yield jumped 7 basis points to 5.447%. The Federal Reserve will release FOMC meeting minutes Thursday at 2 p.m. ET, which traders will examine for signals on future monetary policy after policymakers voted to raise rates for the first time since 2023 at their September meeting.