The 2nd of 3 coupon auctions this week will take place at 1 PM ET with the sale of $39 billion of 10-year notes. Yesterday, the treasury auctioned off 3-year notes, which were met with strong demand from international buyers.
The auction will be compared to the 6-month averages of the major components, including:
- Tail, six-month average -0.8 basis points.
- Bid to cover, six-month average 2.56X.
- Directs (proxy for domestic buyers), six-month average 17.4%.
- Indirects (proxy for international buyers), six-month average 71.1%.
- Dealers (they take the rest) six-month average 11.4%
US yields are trading near low levels for the day with the 10 year at 4.0492%, -2.5 basis points.
The 2-year yield is at 3.531%, -1.1 basis points. The 30 year yield is at 4.697%, -2.0 basis points.
The 10-year U.S. Treasury yield is often viewed as the most important benchmark rate because of its influence on consumer borrowing costs, including mortgages. Since peaking at 4.347% on August 19, the 10-year has dropped to 4.0492%, a decline of about 30 basis points.
Over the same period, the 30-year mortgage rate has fallen more sharply, dropping from 7.0% to 6.49% according to the Mortgage Bankers Association—a move of 51 basis points. Looking at the broader picture for 2025, mortgage rates reached a high of 7.10% in January and are now down 61 basis points from that level.
By comparison, the 10-year yield peaked at 4.809% earlier in the year and has since fallen 76 basis points to current levels. This means that while mortgage rates have declined more than Treasury yields since mid-August, their cumulative decline in 2025 still lags the drop in the 10-year by roughly 15 basis points.
