Treasury’s Nov. 10 sale of $42 billion in 10-year notes attracted weaker bid coverage and less indirect participation than October’s auction, even though it cleared at a lower yield. Bitcoin investors are watching whether today’s long-bond sale makes financing more expensive.
Treasury has scheduled a $25 billion sale of 30-year bonds for Nov. 12 at 1 p.m. Eastern. The results will provide another indication of demand for long-term government debt.
The November 10-year auction cleared at a high yield of 5.02%, down from 5.3% at October’s reopening. But the bid-to-cover ratio fell to 2.46 from 2.77, indicating less bidding relative to the amount awarded. The yield is the return buyers accepted; the coverage ratio reflects the volume of bids.
Indirect bidders received about 61.2% of November’s competitive awards, versus 80.3% in October. These shares exclude noncompetitive allocations and Federal Reserve add-ons.
The size comparison is important. October’s $39 billion sale was a reopening of the August note, while November’s was a new security. August offers a comparison of the same size: its $42 billion new issue drew 2.53 bid coverage and about 76.7% indirect participation. It cleared at 4.68%, below November’s yield.
November saw weaker participation on both measures than either comparator. August matches November’s offering size and new-issue status, though the securities and market conditions differ.
The November sale was fully subscribed. Indirect bidding also does not establish foreign capital flight: Treasury’s bidder definitions include domestic and foreign customers placing orders through intermediaries.
How financing conditions could affect Bitcoin
If weaker bond demand leads to higher long-term yields and tighter financing, investors could have less room in their risk budgets for crypto exposure. Stronger demand and stable financing would lessen that potential concern.
The authors of a 2023 IMF working paper found that U.S. monetary tightening reduced a broad crypto price factor through investor risk-taking. The study looks at monetary tightening, not the effect of a single Treasury auction.
The financing timetable also limits how the cash figures should be interpreted. The 30-year auction settles Nov. 16, along with the other November refunding securities. Treasury’s $125 billion refunding replaces about $97 billion in privately held maturities and raises roughly $28 billion in new private cash. The bond sale’s $25 billion headline amount is gross issuance, not entirely new borrowing.
Today’s test is whether buyers return for the 30-year sale and whether yields rise if demand falls short.
