Weak 10-Year Auction Rekindles Concerns About Long-End Demand — Evening Brief – 02.11.26

Treasuries faced another rough reception from investors on Wednesday, with a $42 billion reopening of 10-year notes landing as one of the weakest long-end sales in recent memory. The auction followed Tuesday’s mediocre $58 billion 3-year note sale, which saw a drop in foreign demand largely offset by record participation from direct bidders, but still pointed to fading enthusiasm at current yield levels. 

The 10-year auction stopped at 4.177%, essentially flat versus last month’s 4.173% and December’s 4.175%, but the more telling metric was the 1.4 basis point tail versus the when-issued yield of 4.163%—the largest since August 2024 and a clear sign dealers had to cheapen the issue to clear. Demand ratios also deteriorated: the bid-to-cover slipped to 2.39, the lowest since August 2025, and would have looked even weaker without sizable central bank demand via SOMA. 

Under the surface, the buyer mix underscored the soft tone. Indirect bidders—a proxy for foreign and official accounts—took just 64.5% of the auction, the lowest share since August 2025 and well below the recent six‑month average above 70%. Direct bidders stepped back as well, down to 22.1% from 24.5% in January, leaving primary dealers with 13.5% of the issue, their heaviest take since August 2025. 

All told, the sale was widely viewed as “a very disappointing auction,” arguably the ugliest reopening of benchmark 10-year paper since 2024. The weak showing puts even more focus on Thursday’s 30-year bond auction, which will offer another key read on investors’ appetite for duration and the market’s comfort with the government’s long-term funding needs.