The US Treasury conducted auctions for 2-year and 5-year bonds on May 27 (local time), with results showing divergent demand patterns. The 2-year auction of $69 billion saw strong demand with a bid-to-cover ratio of 2.66x and a yield of 4.315%, while the 5-year auction of $70 billion experienced weaker demand with a 2.28x bid-to-cover ratio and a 4.408% yield. The auction schedule was adjusted from the typical Tuesday-Thursday format to accommodate the Federal Open Market Committee (FOMC) meeting scheduled for May 28-29.
2-Year Treasury Auction Shows Strong Demand at 4.315% Yield
The morning auction for $69 billion in new 2-year Treasury bonds settled at a yield of 4.315%, according to the US Treasury Department. This represents an increase of 12.6 basis points from the previous month's 4.189% and marks the highest yield since December 2024.
The bid-to-cover ratio rose to 2.66x from 2.64x in the previous auction, exceeding the six-month average of 2.63x. The auction yield came in 0.5 basis points below the when-issued trading yield, indicating demand exceeded market expectations.
Indirect bidders, representing foreign investor demand, accounted for 56.6% of allocations, up 1.1 percentage points from the previous month. Direct bidders received 34.1%, down 0.2 percentage points. Primary dealers took 9.4% of the unsold amount, down from 10.2% previously.
5-Year Treasury Auction Records Weaker Demand at 4.408% Yield
The afternoon auction for $70 billion in new 5-year Treasury bonds concluded with a yield of 4.408%. This yield is 20.8 basis points higher than last month's 4.220% and represents the highest level since December 2024.
The auction yield exceeded the when-issued trading rate by 0.9 basis points, showing a pattern opposite to the 2-year auction. The bid-to-cover ratio declined to 2.28x from 2.35x in the previous auction, falling below the six-month average of 2.33x.
Indirect bidders captured 59.2% of allocations, down 2.4 percentage points from the previous month. Direct bidders increased their share to 27.1%, up 1.7 percentage points. Primary dealers absorbed 13.6% of the offering, an increase of 0.6 percentage points.
7-Year Treasury Auction Scheduled for Next Afternoon
The Treasury has scheduled a $44 billion 7-year bond auction for the next afternoon. The typical Tuesday-through-Thursday auction schedule was modified this week to a Monday-twice, Tuesday-once format due to the FOMC meeting taking place on May 28-29.
FAQ
What were the results of the US Treasury bond auctions on May 27?
The US Treasury conducted two bond auctions on May 27 (local time). The 2-year auction of $69 billion settled at a 4.315% yield with a bid-to-cover ratio of 2.66x, showing strong demand. The 5-year auction of $70 billion settled at a 4.408% yield with a weaker bid-to-cover ratio of 2.28x.
Why did the 2-year and 5-year Treasury auctions show different demand patterns?
The 2-year auction demonstrated stronger demand with a bid-to-cover ratio of 2.66x that exceeded both the previous month and the six-month average, and came in 0.5 basis points below when-issued trading yields. The 5-year auction showed weaker demand with a 2.28x bid-to-cover ratio that fell below both the previous month and the six-month average, settling 0.9 basis points above when-issued yields.
How did the FOMC meeting affect the Treasury auction schedule?
The Treasury adjusted its typical Tuesday-through-Thursday auction schedule to a Monday-twice, Tuesday-once format due to the Federal Open Market Committee meeting scheduled for May 28-29. A 7-year bond auction of $44 billion is scheduled for the next afternoon.
