The U.S. Treasury conducted an auction for $42 billion of 10-year notes, achieving a high yield of 4.255%. The bid to cover ratio was 2.35 times, lower compared to the six-month average of 2.58 times. Domestic buyers accounted for 19.61% as direct bidders, surpassing the six-month average of 16.4%. <\/p>\n
International buyers, identified as indirect bidders, made up 64.23%, which was lower than the six-month average of 72.3%. Dealers were left with 16.16%, noticeably more than the average of 11.2%. The auction’s overall grade was classified as a “D.”<\/p>\n
The auction was characterised by low international interest, reflected in the decreased demand from indirect bidders. Domestic interest appeared relatively stronger, potentially influenced by stablecoin demand.<\/p>\n
The Treasury auction on August 6th was a clear warning signal. A high yield of 4.255% combined with weak demand shows the market is having trouble absorbing government debt. We should anticipate that interest rates will likely push higher in the coming weeks.<\/p>\n
This isn’t happening in a vacuum, as last week’s July 2025 CPI report showed core inflation remains stubborn at 3.8%. The Federal Reserve is unlikely to signal any policy easing with inflation still this far above their target. This supports the case for higher yields across the curve.<\/p>\n
For us, this suggests looking at bearish positions on bonds. We can consider selling 10-year Treasury note futures (\/ZN) or buying put options on bond ETFs like TLT. These trades will profit if bond prices fall as yields continue to climb.<\/p>\n
Higher rates are typically bad news for stocks, which we are already seeing. The S&P 500 has pulled back 3% from its July highs, and the VIX is now above 17, showing rising fear. We should consider buying puts on major indices as a hedge or a direct bet on a further downturn.<\/p>\n
This environment has echoes of late 2023, when the 10-year yield surged towards 5% and caused significant stock market turbulence. Back then, the market had to adjust to the reality of sustained high rates. It appears we are facing a similar test of conviction right now.<\/p>\n
The problem is also one of simple supply and demand, as weak foreign buying forces others to pick up the slack. The Treasury is also scheduled to issue another $120 billion in debt before the end of the month. This continued flood of supply will likely keep upward pressure on borrowing costs.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" U.S. 10-year note auction sees weak international demand, stronger domestic interest; yield hits 4.255 percent.<\/p>\n","protected":false},"author":62,"featured_media":17028,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-28386","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28386","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=28386"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28386\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17028"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=28386"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=28386"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=28386"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}