Yesterday, the U.S. auctioned $39 billion worth of 10-year Treasury bonds and received bids totaling approximately $108 billion, with a bid-to-cover ratio of 2.77x—the highest since 2016. Basically, the U.S. wanted to borrow $100, and the market submitted $277 worth of purchase requests. Not only did buyers bid a lot, but they also offered decent prices. Before the auction, the yield on these bonds was around 5.317%, but they ended up selling at 5.30%. Buyers were willing to accept slightly lower yields just to get their hands on these bonds, showing that demand was indeed strong this time. In the end, direct orders and intermediary orders from investors accounted for about 97.5% of the purchases, while primary dealers only took about 2.5%. Most of these bonds found willing investors. Higher yields tend to attract buyers. Institutions like pension funds and insurance companies, which need to allocate money for many years, may consider buying Treasury bonds to use the interest payments and principal repayment to cover future expenses. With higher returns available now, it’s naturally more tempting for them to invest. On the U.S. government’s side, they did manage to borrow the money, but they’ll have to pay higher interest. This auction shows that the market is still willing to buy at around a 5.30% yield. However, as old debt matures and needs to be refinanced at higher rates, the government’s interest expenses will keep increasing. The next question is whether buyers will still show up if yields drop a bit. If yields decrease and demand remains strong, Treasury prices will stabilize more easily. But if the U.S. has to keep raising yields to attract funds, it’ll be able to borrow money, but at an increasingly higher cost. One @Gate, trading across more markets.