Treasury Caps Strong Week with Robust 30-Year Bond Sale — Evening Brief – 09.11.25
After back-to-back blockbuster sales of 3- and 10-year Treasuries earlier this week, the U.S. Treasury concluded its quarterly coupon supply with another standout performance: a $22 billion auction of 30-year bonds that drew heavy demand across investor categories.
The long bond priced at a high yield of 4.651%, down sharply from 4.813% in August and the lowest level since March. The auction stopped “on the screws” with the When Issued (WI) level, avoiding the kind of tail that unsettled investors just a month ago. This pricing strength signals investors’ willingness to lock in yields ahead of a potential shift in Federal Reserve policy.
Investor demand was broad-based and deep. The bid-to-cover ratio climbed to 2.376, an improvement from 2.266 in August and above the six-auction average of 2.366. Foreign investors purchased 62.03% of the issue, up from 59.52% and the highest share since June—suggesting robust appetite from central banks and reserve managers. Even more striking, direct bidders took down 28.01%, the strongest showing since October 2011 in the wake of the U.S. credit downgrade, underscoring strong interest from pensions, insurers, and other real-money accounts seeking liability-matching duration.
With overseas and direct participation surging, primary dealers were left with just 10.0%, their smallest allocation since June 2023. This dynamic is notable given that dealers often act as buyers of last resort, and their minimal retention highlights the depth of natural demand.
Market impact was immediate. The strong auction capped a week of relentless Treasury strength, following a record 3-year sale on Tuesday and a robust 10-year reopening on Wednesday. Yields across the curve fell to session lows, with the benchmark 10-year briefly slipping below 4.00% earlier in the day—its lowest intraday level in months—as investors priced in the possibility of a 50-basis-point “jumbo cut” at next week’s Fed meeting.
The combination of lower yields, robust global demand, and strong auction internals suggests the Treasury market is entering a phase where funding concerns are temporarily sidelined, replaced by expectations of aggressive Fed easing. For now, investors appear comfortable absorbing heavy issuance, betting that the policy backdrop will support bonds well into year-end.