Treasury offers $22 billion of 30-year bonds on Thursday, October 8, the second reopening of a bond first sold in August at a 5.216 percent yield. Competitive bids close at 1 p.m., and noncompetitive bids closed at noon in the September sale. That sale cleared at 5.308 percent, the highest of the 30-year bond auctions held since last November. The 30-year Treasury yield stood at 5.67 percent on Wednesday, October 7, about 0.36 point above that September mark, so the bonds sell into a market that has kept moving up.
For savers weighing a 30-year Treasury, the auction fixes what new bonds from this sale will pay until August 15, 2056. The coupon is already set at 5.125 percent, which means $512.50 a year on $10,000 of face value, so the auction moves the price rather than the interest. A September buyer who accepted the 5.308 percent yield paid $97.26 per $100 of face value, or $9,726.23 for $10,000, and a higher yield on Thursday means a lower price still.
The yield this auction sets is a new number every month, and Thursday’s has to be measured against September’s 5.308 percent.
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A $22 billion reopening of the August bond
Treasury’s auction data lists Thursday’s offering as $22 billion of the bond with CUSIP 912810UW6, a 5.125 percent coupon, an October 15 issue date and an August 15, 2056 maturity. Treasury labels its remaining life 29 years and 10 months. It is a reopening, which means the sale adds to a bond that already trades rather than creating a new one, so bonds bought Thursday are identical to those sold on August 13 and September 10.
The size follows a pattern Treasury announced in its August 5 quarterly refunding statement, issued under Brian Smith, Deputy Assistant Secretary for Federal Finance. The statement’s financing table has the 30-year bond at $25 billion in August and $22 billion in both September and October, with the 10-year note stepping down from $42 billion to $39 billion over the same months. Treasury also said it expects to keep nominal coupon auction sizes unchanged for at least the next several quarters, based on its current borrowing projections.
The data shows the same rhythm all year: a $25 billion new bond in February, May and August, with $22 billion reopenings in the two months after each. The coupon has been stepping up with the new issues, from 4.625 percent on the November bond to 4.750 percent in February, 5.000 percent in May and 5.125 percent in August. Each coupon is set at or just under the yield of the auction that creates the bond, and every reopening after it then sells at whatever price makes the market yield work.
Eleven 30-year auctions, from 4.694 to 5.308 percent
The 30-year bond auction yield has risen at eight of the ten sales since November 13, Treasury’s auction series shows. The November 13 sale cleared at 4.694 percent, December 11 at 4.773 percent, January 13 at 4.825 percent, then 4.750 percent on February 12. March came in at 4.871 percent, April at 4.876 percent, May at 5.046 percent, June at 5.020 percent, July at 5.058 percent, August at 5.216 percent and September at 5.308 percent, a rise of 0.614 point in ten months.
Demand has held through the climb. Bid-to-cover, the dollars bid for each dollar offered, ran between 2.29 and 2.66 across the eleven sales, and September’s 2.61 was the second-highest after February’s 2.66. In August, the Federal Reserve’s System Open Market Account took a further $6.32 billion on top of the $25 billion offered, bringing that sale to $31.32 billion. In September the Fed’s take was zero, and the full $22 billion went to other buyers, Treasury’s record for the bond shows.
The spread of bids narrowed slightly in September. Treasury’s data lists a median yield of 5.250 percent against the high of 5.308 percent, a gap of 0.058 point, compared with a 5.150 percent median and 5.216 percent high in August, a gap of 0.066 point.
Who bought in September, and where the market stands
Indirect bidders, a group that includes foreign central banks and investment funds, took $17.45 billion of the September bonds, or 79.3 percent of the award. Direct bidders took $4.02 billion, primary dealers $485 million and noncompetitive bidders $42.6 million. Dealers, who must bid at every auction and so absorb what others leave, took 2.2 percent, against 11.5 percent in August and 14.7 percent in June, so September left them very little to carry.
The sale arrives a day after the 10-year note reopening. Treasury’s auction data has that $39 billion sale clearing Wednesday at a 5.300 percent high yield with a bid-to-cover of 2.77, stronger than any 30-year sale this year. The 30-year yield on Treasury’s daily yield curve rose from 5.61 percent on October 1 to 5.67 percent on October 7, while the 20-year ended that day at 5.71 percent, above the 30-year, and the 10-year at 5.28 percent.
Three figures will tell how Thursday went once Treasury posts the results: the high yield against September’s 5.308 percent, the bid-to-cover against 2.61, and the indirect bidders’ share against 79.3 percent. Treasury has not published any of them yet. Because the coupon is fixed at 5.125 percent, any high yield above that figure will show up as a price under face value.
Bidding in a 30-year auction as an individual
Individuals can bid themselves rather than through a fund. TreasuryDirect says on its page about how auctions work that a noncompetitive bid is capped at $10 million per auction and accepts whatever yield the auction sets, and that anyone bidding through a TreasuryDirect account must bid noncompetitively. Competitive bids, which name a yield, go through a bank, broker or dealer and are capped at 35 percent of the offering, or $7.7 billion of a $22 billion sale.
Treasury fills noncompetitive bids first, then accepts competitive bids from the lowest yield upward until the offering is gone, and every winning bidder receives the same yield as the highest accepted bid. Noncompetitive bids totaled $42.6 million in September, 0.2 percent of the award, which shows how little of the 30-year market goes to small bidders. Each sale announcement lists its own closing times, and In September noncompetitive bids closed at noon, an hour before competitive bids.
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This article was produced with AI assistance and reviewed by The Money Overview’s editorial team.
