The Treasury’s sale of $21 billion in 10-year notes drew the weakest demand in more than a year with investors reluctant to make purchases just before the Federal Reserve released minutes of its previous policy meeting.
The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.52 yesterday, the least since August 2013, according to Treasury data compiled by Bloomberg. The auction was conducted an hour before the minutes showed policy makers said a global slowdown and a stronger dollar posed potential risks to the outlook for the U.S. economy.
“It was a surprisingly weak auction, but people wanted to sit it out,” Stanley Sun, a New York-based strategist at Nomura Holdings Inc., one of the 22 primary dealers obligated to bid at Treasury auctions, said in a telephone interview. “There is still uncertainty regarding the Fed, and we’ve rallied quite a bit in a short period of time.”
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