Strong Demand at 3-Year Treasury Sale Sets Positive Tone for Week’s Auctions — Evening Brief – 11.10.25 

The U.S. Treasury’s $58 billion auction of 3-year notes on Monday drew exceptionally strong demand, reinforcing investor appetite for short-maturity government debt.  

The auction stopped at a high yield of 3.579%, nearly unchanged from October’s 3.576%, and came one basis point through the when-issued level—the third consecutive stop-through and the largest since February 2025. Investor participation was notably firm, with the bid-to-cover ratio rising to 2.850 from 2.663 in October and well above the recent 2.583 average, marking the strongest reading since August 2023.  

Indirect bidders, a proxy for foreign demand, took 62.96% of the issuance, slightly above last month and the recent trend, while direct bidders increased their allocation to 27.32%, the highest since August. As a result, primary dealers were left with just 9.7% of the auction, down from 10.7% last month and well below the 13.8% average, signaling broad-based demand across buyer types. The solid results prompted a modest pullback in yields across the curve in secondary trading once the auction priced. 

This auction sets the stage for two key supply events later this week: a $42 billion auction of 10-year notes on Wednesday, which will test intermediate-term demand as investors gauge the path of Federal Reserve rate cuts expected in 2026; and a $25 billion auction of 30-year bonds on Thursday, where appetite for duration will be closely watched against the backdrop of long-term fiscal concerns, inflation expectations, and rising U.S. debt servicing costs.  

Collectively, this week’s issuance will provide a clearer read on investor positioning across the curve as the Treasury continues to rely more heavily on bill issuance and evaluates future increases in coupon and floating rate note sizes.