U.S. 10-Year Treasury Auction Draws Near-Record Foreign Demand — Evening Brief – 09.10.25  

The U.S. Treasury’s $39 billion reopening of 10-year notes was met with surging demand, producing one of the strongest auctions in recent memory. The issue priced at a high yield of 4.033%, well below last month’s 4.255% and marking the lowest yield since September 2024, when a similar auction preceded a 50-basis-point Fed rate cut. 

The auction cleared 1.3 basis points through the When-Issued level, the sharpest stop-through since April’s market turmoil. The bid-to-cover ratio climbed to 2.650, up from 2.351 in the prior auction and well above the six-auction average of 2.556, underscoring robust demand. 

The composition of buyers told the bigger story. Indirect bidders—largely foreign investors—took down 83.1%, the second-highest on record, eclipsed only by April’s 87.9% surge during the basis-trade unwind. Direct bidders accounted for 12.66%, the lowest since April, leaving primary dealers with just 4.2%, an all-time low. 

The strong auction, coupled with Wednesday’s Producer Price Index miss, drove Treasury yields lower in secondary trading, with the 10-year yield slipping to 4.03% after testing 4.10% earlier in the session. 

With Thursday’s CPI release looming as the final inflation print before the Fed’s September policy meeting, the stellar demand and falling yields raise the stakes on whether Chair Jay Powell opts for a 25-basis-point cut or responds more forcefully with a 50-basis-point move.