US 20-Year Treasury Auction Draws Highest Yield Since 1986 at 5.469%

The US Treasury sold $13 billion in 20-year bonds on October 21 at a high yield of 5.469%, the highest level for that tenor since 1986. The result came in 0.9 basis points above the when-issued yield of 5.460% at the bidding deadline, a so-called tail that signals the government had to offer a slight concession to attract buyers.

Demand was nonetheless firmer than the prior auction. The bid-to-cover ratio rose to 2.73 from 2.57 previously, and indirect bidders, typically foreign central banks and institutions, took 58.2% of the sale versus 52.5% before. Direct bidders claimed 31.6%, up from 30.7%, leaving primary dealers with just 10.3% of the offering, a relatively small share. Treasury yields pared an earlier decline following the results, with the 20-year last trading down 1.25 basis points at 5.467% shortly after the auction closed.

The Wall Street Journal characterized the auction as showing softer demand overall, consistent with the positive tail, even as the headline coverage metrics improved on the month.